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**UNITED STATES****SECURITIES AND EXCHANGE COMMISSION****Washington D.C. 20549**

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**FORM 10-Q**

**Quarterly Report Pursuant to      Section 13 or 15(d)****of the Securities Exchange Act of 1934**

**For the quarterly period ended     June      30, 2003****Commission File Number     0-30673**

**NTL EUROPE,          INC.***(Exact name of registrant as specified in its charter)*

| **Delaware**                                                                 | **13-4105887**                                   |
|------------------------------------------------------------------------------|--------------------------------------------------|
| *(State            or other jurisdiction of**incorporation or organization)* | *(I.R.S.          Employer**Identification No.)* |
|                                                                         |                                             |
| **37            Purchase Street****Rye, New York**                           | **10580**                                        |
| *(Address            of principal executive offices)*                        | *(Zip code)*                                     |

Registrant’s telephone number,    including area code: **(914) 921-1800**

Indicate by check mark whether the    registrant (1) has filed all reports required to be filed by Section 13 or    15(d) of the Securities and Exchange Act of 1934 during the preceding 12    months (or for such shorter period that the registrant was required to file    such reports), and (2) has been subject to such filing requirements for the    past 90 days. **YES   ****     ****NO     **

Indicate by check mark whether the    registrant is an accelerated filer as defined in Rule 12b-2 of the Act. **YES   ****     NO   **

Indicate by check mark whether the    registrant has filed all documents and reports required to be filed by Section    12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the    distribution of securities under a plan by a court. **YES   ****     ****NO   **

**Number of shares outstanding at      September 15, 2003: 19,657,769 shares of Common Stock, par value $.01 per      share.**

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**NTL EUROPE,      INC.****INDEX TO FORM 10-Q FOR THE QUARTER  ENDED JUNE 30, 2003.**

| **PART              I:**  | **FINANCIAL            INFORMATION**                                                                                                              |   |
|---------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                      |                                                                                                                                              |   |
| **Item              1.**  | Financial Statements                                                                                                                              |   |
|                      |                                                                                                                                              |   |
|                      | Condensed Consolidated          Balance Sheets as of June 30, 2003 (Unaudited) and December 31, 2002          (Audited)                           | 2      |
|                      |                                                                                                                                              |   |
|                      | Condensed Consolidated          Statements of Operations for the three months and six months ended          June 30, 2003 and 2002 (Unaudited)    | 4      |
|                      |                                                                                                                                              |   |
|                      | Condensed Consolidated          Statement of Shareholders’ (Deficiency) for the six months ended          June 30, 2003 and 2002 (Unaudited) | 5      |
|                      |                                                                                                                                              |   |
|                      | Condensed Consolidated          Statements of Cash Flows for the six months ended June 30, 2003 and          2002 (Unaudited)                     | 6      |
|                      |                                                                                                                                              |   |
|                      | Notes to Condensed          Consolidated Financial Statements (Unaudited)                                                                         | 8      |
|                      |                                                                                                                                              |   |
| **Item              2.**  | Management’s          Discussion and Analysis of Financial Condition and Results of Operations                                               | 33     |
|                      |                                                                                                                                              |   |
| **Item              3.**  | Quantitative          and Qualitative Disclosures About Market Risk                                                                               | 44     |
|                      |                                                                                                                                              |   |
| **Item              4.**  | Controls and          Procedures                                                                                                                  | 45     |
|                      |                                                                                                                                              |
| **RISK FACTORS**          | 46                                                                                                                                                |
|                      |                                                                                                                                              |   |
| **PART              II:** | **OTHER INFORMATION**                                                                                                                             |   |
|                      |                                                                                                                                              |   |
| **Item              1.**  | Legal Proceedings                                                                                                                                 | 53     |
|                      |                                                                                                                                              |   |
| **Item              2.**  | Changes in          Securities and Use of Proceeds                                                                                                | 53     |
|                      |                                                                                                                                              |   |
| **Item              3.**  | Defaults Upon          Senior Securities                                                                                                          | 53     |
|                      |                                                                                                                                              |   |
| **Item              4.**  | Submission          of Matters to a Vote of Security Holders                                                                                      | 53     |
|                      |                                                                                                                                              |   |
| **Item              5.**  | Other Information                                                                                                                                 | 53     |
|                      |                                                                                                                                              |   |
| **Item              6.**  | Exhibits and          Reports on Form 8-K                                                                                                         | 53     |
|                      |                                                                                                                                              |
| **SIGNATURES**            | 55                                                                                                                                                |

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| **PART I:** | **FINANCIAL            INFORMATION** |
|-------------|--------------------------------------|

|                                         |   |
|----------------------------------------------|--------|
| **Item 1:****Financial          Statements** |

**NTL Europe, Inc. and Subsidiaries****Condensed Consolidated Balance Sheets****(amounts in millions)**

|                                                                                                                     |   | **June          30,2003****Reorganized****Company** |    |   | **December          31,2002****Predecessor****Company****(see note)** |   |
|--------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------|---------|--------|-----------------------------------------------------------------------|--------|
|                                                                                                                     |   |                                                     |         |   |                                                                  |        |  |   |
|                                                                                                                     |   | **(unaudited)**                                     |    |   | **(audited)**                                                         |   |
| **Assets**                                                                                                               |   |                                                |    |   |                                                                  |   |   |   |
| Current          assets:                                                                                                 |   |                                                |    |   |                                                                  |   |   |   |
| Cash          and cash equivalents                                                                                       |   | $                                                   | 148.1   |   |                                                                  | $      | 277.5 |   |
| Marketable          securities                                                                                           |   |                                                | —  |   |                                                                  |   | 17.3 |   |
| Accounts          receivable – trade, less allowance for doubtful accounts of $11.0          (2003) and $9.4 (2002) |   |                                                | 73.6    |   |                                                                  |   | 243.4 |   |
| Other                                                                                                                    |   |                                                | 74.5    |   |                                                                  |   | 50.3 |   |
| Discontinued          operations                                                                                         |   |                                                | —  |   |                                                                  |   | 12,968.1 |   |
|                                                                                                                     |   |                                                     |         |   |                                                                  |        |  |   |
| Total          current assets                                                                                            |   |                                                | 296.2   |   |                                                                  |   | 13,556.6 |   |
| Fixed          assets, net                                                                                               |   |                                                | 1,157.3 |   |                                                                  |   | 1,682.1 |   |
| Goodwill                                                                                                                 |   |                                                | —  |   |                                                                  |   | 218.7 |   |
| Reorganization          value in excess of amounts allocable to identifiable assets                                      |   |                                                | 221.5   |   |                                                                  |   | — |   |
| Customer          lists, net of accumulated amortization of $5.6 (2003) and $171.4 (2002)                                |   |                                                | 208.9   |   |                                                                  |   | 62.8 |   |
| Investments          in and loans to affiliates, net                                                                     |   |                                                | 21.0    |   |                                                                  |   | 13.0 |   |
| Deferred          tax asset                                                                                              |   |                                                | 91.8    |   |                                                                  |   | 195.3 |   |
| Other          assets, net of accumulated amortization of $62.4 (2002)                                                   |   |                                                | 19.3    |   |                                                                  |   | 120.9 |   |
|                                                                                                                     |   |                                                     |         |   |                                                                  |        |  |   |
| Total          assets                                                                                                    |   | $                                                   | 2,016.0 |   |                                                                  | $      | 15,849.4 |   |
|                                                                                                                     |   |                                                     |         |   |                                                                  |        |  |   |

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**NTL Europe, Inc. and Subsidiaries****Condensed Consolidated Balance Sheets – continued****(amounts in millions)**

|                                                                                                                                                                                       |   |   | **June 30,****2003****Reorganized****Company** |   |   |   | **December 31,****2002****Predecessor****Company****(see note)** |   |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------|------------------------------------------------|--------|--------|--------|------------------------------------------------------------------|--------|
|                                                                                                                                                                                       |   |        |                                                |   |   |        |                                                                  |   |
|                                                                                                                                                                                       |   |   | **(unaudited)**                                |   |   |   | **(audited)**                                                    |   |
| **Liabilities and shareholders’ (deficiency)**                                                                                                                                        |   |   |                                           |   |   |   |                                                             |   |
| Liabilities not subject to compromise                                                                                                                                                      |   |   |                                           |   |   |   |                                                             |   |
| Current liabilities:                                                                                                                                                                       |   |   |                                           |   |   |   |                                                             |   |
| Accounts payable                                                                                                                                                                           |   | $      | 32.7                                           |   |   | $      | 49.3                                                             |   |
| Accrued expenses and other                                                                                                                                                                 |   |   | 68.5                                           |   |   |   | 92.5                                                             |   |
| Interest payable                                                                                                                                                                           |   |   | 9.6                                            |   |   |   | 43.5                                                             |   |
| Deferred revenue                                                                                                                                                                           |   |   | 145.9                                          |   |   |   | 235.6                                                            |   |
| Current portion of long-term debt                                                                                                                                                          |   |   | 2,809.6                                        |   |   |   | 2,719.3                                                          |   |
| Discontinued operations (including liabilities subject to compromise of $10,157.8)                                                                                                         |   |   | —                                         |   |   |   | 17,956.2                                                         |   |
|                                                                                                                                                                                       |   |        |                                                |   |   |        |                                                                  |   |
| Total current liabilities                                                                                                                                                                  |   |   | 3,066.3                                        |   |   |   | 21,096.4                                                         |   |
| Other                                                                                                                                                                                      |   |   | 132.3                                          |   |   |   | 132.7                                                            |   |
| Deferred income taxes                                                                                                                                                                      |   |   | 135.3                                          |   |   |   | 226.0                                                            |   |
| Liabilities subject to compromise, including redeemable preferred stock                                                                                                                    |   |   | —                                         |   |   |   | 4,294.1                                                          |   |
| Commitments and contingent liabilities                                                                                                                                                     |   |   |                                           |   |   |   |                                                             |   |
| Mandatorily redeemable preferred stock – authorized 20.0 shares; issued and outstanding 6.9 shares, liquidation preference $360.2                                                     |   |   | 114.7                                          |   |   |   | —                                                           |   |
|                                                                                                                                                                                       |   |   |                                           |   |   |   |                                                             |   |
| Shareholders’ (deficiency):                                                                                                                                                           |   |   |                                           |   |   |   |                                                             |   |
| Common stock – $.01 par value; authorized 60.0 shares; issued and outstanding 19.7 shares (2003); $.01 par value; authorized 800.0 shares; issued and outstanding 276.6 shares (2002) |   |   | 0.2                                            |   |   |   | 2.8                                                              |   |
| Additional paid-in capital                                                                                                                                                                 |   |   | —                                         |   |   |   | 13,574.9                                                         |   |
| Accumulated other comprehensive (loss)                                                                                                                                                     |   |   | 3.7                                            |   |   |   | (830.2                                                           | )      |
| (Deficit)                                                                                                                                                                                  |   |   | (1,436.5                                       | )      |   |   | (22,647.3                                                        | )      |
|                                                                                                                                                                                       |   |        |                                                |   |   |        |                                                                  |   |
|                                                                                                                                                                                       |   |   | (1,432.6                                       | )      |   |   | (9,899.8                                                         | )      |
|                                                                                                                                                                                       |   |        |                                                |   |   |        |                                                                  |   |
| Total liabilities and shareholders’ (deficiency)                                                                                                                                      |   | $      | 2,016.0                                        |   |   | $      | 15,849.4                                                         |   |
|                                                                                                                                                                                       |   |        |                                                |   |   |        |                                                                  |   |

See accompanying notes.

 

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**NTL Europe, Inc. and Subsidiaries****Condensed Consolidated Statements of Operations****(unaudited)****(amounts in millions, except per share amounts)**

|                                                                                     |   | **Three months ended June 30,** |                       | **Six months ended June 30,** |                                     |
|------------------------------------------------------------------------------------------|--------|---------------------------------|----------------------------|-------------------------------|------------------------------------------|
|                                                                                     |   | **2003**                        |                       |                          | **2002**                                 |   | **2003** |   |   | **2002** |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
|                                                                                     |   | **Reorganized****Company**      |                       |                          | **Predecessor****Company****(see note)** |   | **Reorganized****Company** |   |   | **Predecessor****Company****(see note)** |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| **Revenues**                                                                             |   | $                               | 122.7                      |                          |                                     | $ | 100.2 |   | $ | 242.3 |   |   | $ | 188.8 |   |
| **Costs and expenses**                                                                   |   |                            |                       |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Operating expenses (exclusive of depreciation shown separately below)                    |   |                            | 46.7                       |                          |                                     |   | 38.0 |   |   | 90.9 |   |   |   | 82.2 |   |
| Selling, general and administrative expenses                                             |   |                            | 40.0                       |                          |                                     |   | 51.3 |   |   | 69.8 |   |   |   | 71.8 |   |
| Asset impairments                                                                        |   |                            | —                     |                          |                                     |   | 12.9 |   |   | — |   |   |   | 12.9 |   |
| Other charges                                                                            |   |                            | 0.1                        |                          |                                     |   | 2.4 |   |   | 3.6 |   |   |   | 3.4 |   |
| Corporate expenses                                                                       |   |                            | 4.5                        |                          |                                     |   | 4.3 |   |   | 9.2 |   |   |   | 11.2 |   |
| Depreciation                                                                             |   |                            | 46.7                       |                          |                                     |   | 49.0 |   |   | 92.4 |   |   |   | 94.9 |   |
| Amortization                                                                             |   |                            | 3.0                        |                          |                                     |   | 18.9 |   |   | 5.5 |   |   |   | 36.7 |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
|                                                                                     |   |                            | 141.0                      |                          |                                     |   | 176.8 |   |   | 271.4 |   |   |   | 313.1 |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| Operating (loss)                                                                         |   |                            | (18.3                      | )                             |                                     |   | (76.6 | ) |   | (29.1 | ) |   |   | (124.3 | ) |
| **Other income (expense)**                                                               |   |                            |                       |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Interest income and other, net                                                           |   |                            | 2.1                        |                          |                                     |   | (3.4 | ) |   | 2.0 |   |   |   | 7.9 |   |
| Interest expense                                                                         |   |                            | (372.5                     | )                             |                                     |   | (39.1 | ) |   | (1,398.4 | ) |   |   | (86.0 | ) |
| Share of (losses) from equity investments                                                |   |                            | (1.3                       | )                             |                                     |   | (37.5 | ) |   | (1.7 | ) |   |   | (86.7 | ) |
| Foreign currency transaction gains                                                       |   |                            | 0.1                        |                          |                                     |   | 2.2 |   |   | 0.6 |   |   |   | 2.2 |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| (Loss) before recapitalization items, income taxes and discontinued operations           |   |                            | (389.9                     | )                             |                                     |   | (154.4 | ) |   | (1,426.6 | ) |   |   | (286.9 | ) |
| Recapitalization items, net                                                              |   |                            | —                     |                          |                                     |   | (8.0 | ) |   | — |   |   |   | (21.7 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| (Loss) before income taxes and discontinued operations                                   |   |                            | (389.9                     | )                             |                                     |   | (162.4 | ) |   | (1,426.6 | ) |   |   | (308.6 | ) |
| Income tax benefit (expense)                                                             |   |                            | (0.6                       | )                             |                                     |   | 14.7 |   |   | (1.3 | ) |   |   | 25.5 |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| (Loss) from continuing operations                                                        |   |                            | (390.5                     | )                             |                                     |   | (147.7 | ) |   | (1,427.9 | ) |   |   | (283.1 | ) |
| Discontinued operations:                                                                 |   |                            |                       |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| (Loss) from discontinued operations, net of income tax benefits of $6.3 and $18.8 (2002) |   |                            | —                     |                          |                                     |   | (408.4 | ) |   | — |   |   |   | (878.9 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| Net (loss)                                                                               |   |                            | (390.5                     | )                             |                                     |   | (556.1 | ) |   | (1,427.9 | ) |   |   | (1,162.0 | ) |
| Preferred stock dividends and accretion                                                  |   |                            | (4.2                       | )                             |                                     |   | (43.5 | ) |   | (8.6 | ) |   |   | (141.9 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| Net (loss) available to common shareholders                                              |   | $                               | (394.7                     | )                             |                                     | $ | (599.6 | ) | $ | (1,436.5 | ) |   | $ | (1,303.9 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
| Basic and diluted net (loss) per share:                                                  |   |                            |                       |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|      (Loss) from continuing operations                          |   | $                               | (20.08                     | )                             |                                     | $ | (0.69 | ) | $ | (73.08 | ) |   | $ | (1.54 | ) |
|      (Loss) from discontinued operations                        |   |                            | —                     |                          |                                     |   | (1.48 | ) |   | — |   |   |   | (3.18 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
|      Net (loss) per common share                                |   | $                               | (20.08                     | )                             |                                     | $ | (2.17 | ) | $ | (73.08 | ) |   | $ | (4.72 | ) |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
|      Weighted average shares                                    |   |                            | 19,657,433                 |                          |                                     |   | 276,626,475 |   |   | 19,657,433 |   |   |   | 276,626,475 |   |
|                                                                                     |   |                                 |                            |                          |                                     |  |  |   |  |  |   |   |  |  |   |
|                                                                                     |   |                            |                       |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            | **January 1,**             |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            |                            |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            | **2003**                   |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            |                            |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            | **Predecessor****Company** |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            |                            |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – fixed assets                                                 |   | $                               | (507.2                     | )                             |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – debt                                                         |   |                            | 1,313.2                    |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – intangible assets                                            |   |                            | 145.3                      |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – deferred taxes                                               |   |                            | (13.5                      | )                             |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – pensions                                                     |   |                            | (31.2                      | )                             |                                     |   |   |   |   |   |   |   |   |   |   |
| Fresh start adoption – all other                                                    |   |                            | (10.3                      | )                             |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                 |                       |                          |                                     |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                            | 896.3                      |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Gain on discontinued operations                                                          |   |                            | 5,041.3                    |                          |                                     |   |   |   |   |   |   |   |   |   |   |
| Gain on debt discharge                                                                   |   |                            | 3,962.4                    |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                 |                       |                          |                                     |   |   |   |   |   |   |   |   |   |
| Net income                                                                               |   | $                               | 9,900.0                    |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                 |                       |                          |                                     |   |   |   |   |   |   |   |   |   |
| Basic and diluted net income per share                                                   |   | $                               | 35.79                      |                          |                                     |   |   |   |   |   |   |   |   |   |   |
|                                                                                     |   |                                 |                       |                          |                                     |   |   |   |   |   |   |   |   |   |

See accompanying notes.

 

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**NTL Europe, Inc. and Subsidiaries****Condensed Consolidated Statement of Shareholders’ (Deficiency)****(unaudited)****(dollars in millions)**

|                                                |   |   |    **Series          Preferred Stock****$.01 Par Value** |   | **Common          Stock****$.01 Par Value** |                                    |   |                        |         |   |   |                                   |   | **Accumulated          Other****Comprehensive****(Loss)** |                                              |   |   |                                    |
|-----------------------------------------------------|--------|--------|-------------------------------------------------------------------------|--------|---------------------------------------------|-----------------------------------------|--------|-----------------------------|--------------|--------|--------|----------------------------------------|--------|-----------------------------------------------------------|---------------------------------------------------|--------|--------|-----------------------------------------|
|                                                |   |   |                                                                    |   |                                        | **Additional          Paid-in Capital** |   |                        |         |   |   | **Foreign****Currency****Translation** |   |                                                      | **Unrealized****Net Losses    on****Derivatives** |   |   | **Pension****Liability****Adjustments** |   |   | **(Deficit)** |   |
|                                                |   |   |                                                                    |   |                                        |                                    |   | **Comprehensive****(Loss)** |         |   |   |                                   |   |                                                      |                                              |   |   |
|                                                |   |   | **Shares**                                                              |   |                                        | **Par**                                 |   |                        | **Shares**   |   |   | **Par**                                |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |
|                                                |   |        |                                                                         |   |                                             |                                         |   |                             |              |   |        |                                        |   |                                                           |                                                   |   |        |                                         |   |  |  |   |  |  |   |  |  |   |  |  |   |
|                                                |
| **Predecessor Company**                             |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, December 31, 2002                          |   |   | 3,000,000                                                               |   | $                                           | —                                  |   |                        | 276,626,475  |   | $      | 2.8                                    |   | $                                                         | 13,574.9                                          |   |   |                                    |   | $ | (770.1 | ) | $ | (30.1 | ) | $ | (30.0 | ) | $ | (22,647.3 | ) |
| Net Income January 1, 2003                          |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   | $      | 9,900.0                                 |   |   |   |   |   |   |   |   |   |   |   | 9,900.0 |   |
| Issuance of Common Stock                            |   |   |                                                                    |   |                                        |                                    |   |                        | 19,657,433   |   |   | 0.2                                    |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Fresh-start    adoptions – other               |   |   | (3,000,000                                                              | )      |                                        |                                    |   |                        | (276,626,475 | )      |   | (2.8                                   | )      |                                                      | (13,574.9                                         | )      |   |                                    |   |   | 770.1 |   | $ | (30.1 | ) | $ | (30.0 | ) |   | 12,747.3 |   |
|                                                |   |        |                                                                         |   |                                             |                                         |   |                             |              |   |        |                                        |   |                                                           |                                                   |   |        |                                         |   |  |  |   |  |  |   |  |  |   |  |  |   |
|                                                |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| **Reorganized Company**                             |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Balance, January 1, 2003                            |   |   | —                                                                  |   |                                        | —                                  |   |                        | 19,657,433   |   |   | 0.2                                    |   |                                                      | —                                            |   |   |                                    |   |   | — |   |   | — |   |   | — |   |   | — |   |
| Accretion on mandatorily redeemable preferred stock |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   | (8.6 | ) |
| Comprehensive loss:                                 |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   |                                    |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Net loss for the six months ended June 30, 2003     |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   | $      | (1,427.9                                | ) |   |   |   |   |   |   |   |   |   |   | (1,427.9 | ) |
| Currency translation adjustments                    |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   | 3.5                                     |   |   | 3.5 |   |   |   |   |   |   |   |   |   |   |
| Unrealized losses on derivatives                    |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |   | 0.2                                     |   |   |   |   |   | 0.2 |   |   |   |   |   |   |   |
|                                                |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   |        |                                    |   |   |   |   |   |   |   |   |   |   |   |   |
| Total                                               |   |   |                                                                    |   |                                        |                                    |   |                        |         |   |   |                                   |   |                                                      |                                              |   | $      | (1,424.2                                | ) |   |   |   |   |   |   |   |   |   |   |   |   |
|                                                |   |        |                                                                    |        |                                        |                                         |   |                             |         |        |   |                                        |   |                                                           |                                              |        |   |                                         |   |  |   |
| Balance, June 30, 2003                              |   |   | —                                                                  |   | $                                           | —                                  |   |                        | 19,657,433   |   | $      | 0.2                                    |   | $                                                         | —                                            |   |   |                                    |   | $ | 3.5 |   | $ | 0.2 |   | $ | — |   | $ | (1,436.5 | ) |
|                                                |   |        |                                                                    |        |                                        |                                         |   |                             |         |        |   |                                   |   |                                                      |                                                   |   |        |                                    |  |   |  |   |

See accompanying notes.

 

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**NTL Europe, Inc. and Subsidiaries****Consolidated Statements of Cash Flows****(unaudited)****(dollars in millions)**

|                                                                                                    |   | **Six          months ended June 30,** |     | **January          1,** |                                     |
|---------------------------------------------------------------------------------------------------------|--------|----------------------------------------|----------|-------------------------|------------------------------------------|
|                                                                                                    |   | **2003**                               |     |                    | **2002**                                 |   | **2003** |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
|                                                                                                    |   | **Reorganized****Company**             |     |                    | **Predecessor****Company****(see note)** |   | **Predecessor****Company** |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| **Operating activities**                                                                                |   |                                   |     |                    |                                     |   |   |   |   |   |   |
| Net (loss) income                                                                                       |   | $                                      | (1,427.9 | )                       |                                     | $ | (1,162.0 | ) | $ | 9,900.0 |   |
| (Loss) from discontinued operations                                                                     |   |                                   | —   |                    |                                     |   | (878.9 | ) |   | — |   |
| Gain on disposal of discontinued operations                                                             |   |                                   | —   |                    |                                     |   | — |   |   | 5,041.3 |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| (Loss) income from continuing operations                                                                |   |                                   | (1,427.9 | )                       |                                     |   | (283.1 | ) |   | 4,858.7 |   |
| Adjustments to reconcile net (loss) to net cash provided by (used in) continuing operations:            |   |                                   |     |                    |                                     |   |   |   |   |   |   |
| Depreciation and amortization                                                                           |   |                                   | 98.0     |                    |                                     |   | 131.6 |   |   | — |   |
| Asset impairments                                                                                       |   |                                   | —   |                    |                                     |   | 12.9 |   |   | — |   |
| Write-off of other assets included in other income and expense                                          |   |                                   | 0.8      |                    |                                     |   | — |   |   | — |   |
| Equity in losses of unconsolidated subsidiaries                                                         |   |                                   | 1.7      |                    |                                     |   | 86.7 |   |   | — |   |
| Non-cash compensation                                                                                   |   |                                   | —   |                    |                                     |   | 10.4 |   |   | — |   |
| Loss (gain) on sale of assets                                                                           |   |                                   | —   |                    |                                     |   | (3.2 | ) |   | — |   |
| Provision for losses on accounts receivable                                                             |   |                                   | 1.4      |                    |                                     |   | 3.3 |   |   | — |   |
| Deferred income taxes                                                                                   |   |                                   | (1.5     | )                       |                                     |   | (23.8 | ) |   | — |   |
| Non cash gain on debt discharge                                                                         |   |                                   | —   |                    |                                     |   | — |   |   | (4,133.3 | ) |
| Fresh start adjustments                                                                                 |   |                                   | —   |                    |                                     |   | — |   |   | (896.3 | ) |
| Accretion on debt                                                                                       |   |                                   | 1,345.0  |                    |                                     |   | — |   |   | — |   |
| Other                                                                                                   |   |                                   | 2.5      |                    |                                     |   | (173.4 | ) |   | — |   |
| Changes in operating assets and liabilities, net of effect from business acquisitions and dispositions: |   |                                   |     |                    |                                     |   |   |   |   |   |   |
| Accounts receivable                                                                                     |   |                                   | 174.6    |                    |                                     |   | 128.6 |   |   | — |   |
| Other current assets                                                                                    |   |                                   | (21.1    | )                       |                                     |   | (16.5 | ) |   | — |   |
| Other assets                                                                                            |   |                                   | 11.1     |                    |                                     |   | (1.6 | ) |   | — |   |
| Accounts payable                                                                                        |   |                                   | (18.0    | )                       |                                     |   | (13.4 | ) |   | — |   |
| Accrued expenses and other                                                                              |   |                                   | (34.9    | )                       |                                     |   | 5.9 |   |   | — |   |
| Deferred revenue                                                                                        |   |                                   | (95.3    | )                       |                                     |   | (65.4 | ) |   | — |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| Net cash provided by (used in) continuing operations                                                    |   |                                   | 36.4     |                    |                                     |   | (201.0 | ) |   | (170.9 | ) |
| Net cash provided by (used in) discontinued operations                                                  |   |                                   | —   |                    |                                     |   | 240.1 |   |   | — |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| Net cash provided by (used in) operating activities                                                     |   |                                   | 36.4     |                    |                                     |   | 39.1 |   |   | (170.9 | ) |
|                                                                                                    |   |                                   |     |                    |                                     |   |   |   |   |   |   |
| **Investing activities**                                                                                |   |                                   |     |                    |                                     |   |   |   |   |   |   |
| Acquisitions, net of cash acquired                                                                      |   |                                   | —   |                    |                                     |   | (12.0 | ) |   | — |   |
| Purchase of fixed assets                                                                                |   |                                   | (49.4    | )                       |                                     |   | (45.0 | ) |   | — |   |
| Investments in and loans to affiliates                                                                  |   |                                   | (1.5     | )                       |                                     |   | (19.1 | ) |   | — |   |
| Increase in other assets                                                                                |   |                                   | —   |                    |                                     |   | (0.3 | ) |   | — |   |
| Proceeds from sale of Australia                                                                         |   |                                   | —   |                    |                                     |   | 444.8 |   |   | — |   |
| Proceeds from sales of assets                                                                           |   |                                   | 1.1      |                    |                                     |   | 8.9 |   |   | — |   |
| Purchase of marketable securities                                                                       |   |                                   | —   |                    |                                     |   | (48.1 | ) |   | — |   |
| Proceeds from sales of marketable securities                                                            |   |                                   | —   |                    |                                     |   | 12.1 |   |   | — |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| Net cash (used in) continuing operations                                                                |   |                                   | (49.8    | )                       |                                     |   | 341.3 |   |   | — |   |
| Net cash (used in) discontinued operations                                                              |   |                                   | —   |                    |                                     |   | (444.7 | ) |   | — |   |
|                                                                                                    |   |                                        |          |                    |                                     |  |  |   |  |  |   |
| Net cash (used in) investing activities                                                                 |   |                                   | (49.8    | )                       |                                     |   | (103.4 | ) |   | — |   |

 

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**NTL Europe, Inc. and Subsidiaries****Consolidated Statements of Cash Flows – continued****(unaudited)****(dollars in millions)**

|                                                                           |   | **Six          months ended June 30,** |   | **January          1,** |                       |
|--------------------------------------------------------------------------------|--------|----------------------------------------|--------|-------------------------|----------------------------|
|                                                                           |   | **2003**                               |   |                    | **2002**                   |   | **2003** |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
|                                                                           |   | **Reorganized****Company**             |   |                    | **Predecessor****Company** |   | **Predecessor****Company** |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
| **Financing activities**                                                       |   |                                   |   |                    |                       |   |   |   |   |   |   |
| Proceeds from discontinued operations, upon emergence from bankruptcy          |   |                                   | — |                    |                       |   | — |   |   | 53.2 |   |
| Proceeds from borrowings, net of financing costs                               |   |                                   | — |                    |                       |   | 100.3 |   |   | — |   |
| Principal payments                                                             |   |                                   | (0.7   | )                       |                       |   | (0.8 | ) |   | — |   |
| Repayment of NTL Australia bank loan                                           |   |                                   | — |                    |                       |   | (121.7 | ) |   | — |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
| Net cash (used in) provided by financing activities of continuing operations   |   |                                   | (0.7   | )                       |                       |   | (22.2 | ) |   | 53.2 |   |
| Net cash (used in) provided by financing activities of discontinued activities |   |                                   | — |                    |                       |   | 451.6 |   |   | — |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
| Net cash (used in) provided by financing activities                            |   |                                   | (0.7   | )                       |                       |   | 429.4 |   |   | 53.2 |   |
| Effect of exchange rate changes on cash                                        |   |                                   | 2.4    |                    |                       |   | 41.8 |   |   | — |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
| Increase (decrease) in cash and cash equivalents                               |   |                                   | (11.7  | )                       |                       |   | 406.9 |   |   | (117.7 | ) |
| Cash and cash equivalents at beginning of year – continuing operations    |   |                                   | 159.8  |                    |                       |   | 228.3 |   |   | 277.5 |   |
| Cash and cash equivalents at beginning of year – discontinued operations  |   |                                   | — |                    |                       |   | 276.3 |   |   | — |   |
| Cash and cash equivalents at end of period – discontinued operations      |   |                                   | — |                    |                       |   | (553.0 | ) |   | — |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
| Cash and cash equivalents at end of period – continuing operations        |   | $                                      | 148.1  |                    |                       | $ | 358.5 |   | $ | 159.8 |   |
|                                                                           |   |                                        |        |                    |                       |  |  |   |  |  |   |
|                                                                           |   |                                   |   |                    |                       |   |   |   |   |   |   |
| **Supplemental disclosure of cash flow information**                           |   |                                   |   |                    |                       |   |   |   |   |   |   |
| Cash paid during the period for interest exclusive of amounts capitalized      |   | $                                      | 67.9   |                    |                       | $ | 277.6 |   | $ | — |   |
| Income taxes paid                                                              |   |                                   | — |                    |                       |   | 1.3 |   |   | — |   |

See accompanying notes.

 

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|   |                          |
|--------|-------------------------------|
| **1.** | **Organization and Business** |

|                                   |
|----------------------------------------|
| **NTL’s Completed Restructuring** |

On May 8, 2002, the entity then known as NTL Incorporated (“Old NTL”) and certain of its subsidiaries as of that time each filed a pre-arranged joint reorganization plan (the “Plan”) under Chapter 11 of the U.S. Bankruptcy Code. Old NTL’s operating subsidiaries were not included in the Chapter 11 filing. The Plan became effective on January 10, 2003 (the “Effective Date”) at which time Old NTL emerged from Chapter 11 reorganization.

Pursuant to the Plan, Old NTL and its subsidiaries were split into two separate companies. The entity formerly known as “NTL Incorporated” was renamed “NTL Europe, Inc.” and became the holding company for certain European and other assets of Old NTL (the “Company”). The entity formerly known as NTL Communications Corp. was renamed “NTL Incorporated” and became the holding company for Old NTL’s principal UK and Ireland assets (“New NTL”). Pursuant to the Plan, all of the outstanding securities of Old NTL and certain of its subsidiaries were cancelled, and the Company issued shares of its common stock, par value $0.01 per share (the “Common Stock”), and 10% Fixed Coupon Redeemable Preferred Stock, Series A, par value $0.01 per share (with a $50.00 liquidation preference per share) (the “Preferred Stock”), and New NTL issued shares of its common stock and Series A warrants to various former creditors and stockholders of Old NTL and its subsidiaries. The precise mix of new securities received by holders of each particular type of security of Old NTL and its subsidiaries was set forth in the Plan. New NTL is an independent entity which is no longer owned by or affiliated with the Company.

New NTL has been accounted for as a discontinued operation beginning with the quarter ended September 30, 2002 and, accordingly, it is excluded from assets and liabilities of continuing operations as of December 31, 2002; New NTL has been completely removed from the Company’s consolidated financial statements, as part of the emergence from bankruptcy and application of Fresh Start Accounting, effective January 1, 2003.

With the separation of Old NTL into two entities, the majority of the significant assets and holdings formerly owned and consolidated by Old NTL were retained by New NTL. Generally, other than Cablecom GmbH, an indirect, wholly-owned subsidiary of the Company (“Cablecom”) (which is itself being restructured as described below), the Company’s assets are not material compared to those of New NTL. As a result of the existing defaults under Cablecom’s debt agreements and its overindebtedness, in the near future, the Company expects its interest in Cablecom to be acquired or eliminated.

The Company’s board of directors and management are exploring the strategic and financial alternatives available to the Company, including the Company’s possible liquidation, a going-private transaction and the sale of its remaining assets. In that regard, the board established a special committee charged with reviewing, considering, investigating, evaluating, negotiating and recommending action to the entire board with respect to one or more possible going private transactions. By July 1, 2003, the special committee had retained its own legal counsel and financial advisor to advise it in connection with its duties.

The Company’s historic financial statements presented herein are not particularly reflective of the Company’s current and anticipated future business and should not be relied upon as indicative of the Company’s future performance.

 

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| **Historical Structure of the Company** |
|-----------------------------------------|

On May 18, 2000, the entity then known as NTL Incorporated (currently named Parc Holdings, Inc. (but until August 4, 2003 known as NTL (Delaware), Inc.) (“Parc Holdings”)) completed a corporate restructuring to create a holding company structure. The formation of the holding company was part of Parc Holdings’ acquisition of certain assets of Cable & Wireless Communications plc. The holding company restructuring was accomplished through a merger so that all the stockholders of Parc Holdings at the effective time of the merger became stockholders of the new holding company, and Parc Holdings became a subsidiary of the new holding company. The new holding company was called NTL Incorporated (which is now known as NTL Europe, Inc.) and the holding company’s subsidiary simultaneously changed its name to NTL (Delaware), Inc. but on August 4, 2003 changed its name to Parc Holdings, Inc.

The Company conducts its operations through direct and indirect wholly-owned subsidiaries.

| **Business** |
|--------------|

The Company, through its direct and indirect wholly-owned subsidiaries, owns and operates Premium TV Limited, Cablecom, NTL Lanbase, SL, NTL Broadcast (Thailand) Ltd. and NTL Broadcast Sdn, Ltd. Premium TV Limited (“Premium TV”) exploits sports-related Internet and media rights in the United Kingdom. Cablecom is the largest cable television operator in Switzerland, but, as discussed below, it is “overindebted” under Swiss law and it is unlikely that the Company will retain any significant interest in Cablecom. NTL Lanbase, SL is based in Spain and is a value-added reseller of equipment for corporate data networks in Spain. NTL Broadcast (Thailand) Ltd. and NTL Broadcast Sdn, Ltd., together with New NTL’s branch office in Singapore, offer operations and maintenance services, design and build, consultancy and system integration services to broadcasters in Malaysia and Thailand.

Cablecom has approximately CHF 3,792 million in bank debt (which includes recently accrued interest payments) that initially matured on April 30, 2003 but the lenders have extended such due date until October 31, 2003. Cablecom has insufficient resources to satisfy such obligation. In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law and, accordingly, may be required to file for insolvency proceedings in Switzerland. Cablecom and its lenders have been involved in ongoing discussions regarding a complete financial restructuring of Cablecom and, on June 19, 2003, Cablecom’s board of directors had been advised that 100% of its lenders and other holders of economic interests in Cablecom’s bank debt have agreed upon the principal terms and parameters for the restructuring of that debt.

|   |   | The principal terms for the financial restructuring    are:                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                               |
|   | • | The outstanding principal amount of the debt would be reduced from approximately CHF 3.8 billion to approximately CHF 1.7 billion. |

|   |   |                                                                                                                                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | The facility would be split into two tranches, one with a final maturity date of December 31, 2009 and one with a final maturity date of June 30, 2010. |

|   |   |                                                                                                                                                                                                            |
|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Cablecom’s lenders would acquire control of substantially all of Cablecom’s share capital, with the Company’s remaining interest being acquired by certain members of the new shareholder group. |

|   |   |                                                                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | At the time of the consummation of the restructuring, the additional equity capital would be raised through a rights offering to the new shareholder group. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring |

 

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|   |                                                                                                                                                                                                                                                                             |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom. Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group. |

The Company also has various equity and cost method investments detailed in Note 9.

The Company’s most significant holdings are currently being restructured, and the Company is reviewing all of its holdings to determine the most appropriate course of action, which may result in one or more of these holdings being sold, transferred, foreclosed on, liquidated, wound-up or otherwise disposed of in the near future or at a later date. The Company may not receive any proceeds from any of these transactions after the payment of outstanding debt that some of these companies may owe and any fees and expenses incurred in connection with these transactions. See, in particular, Note 16 “Commitments and Contingent Liabilities – Cablecom.” To the extent the Company receives cash proceeds from any asset sale it or its subsidiaries complete, the Preferred Stock will be entitled to mandatory redemption in a like amount, subject to some limited exceptions set forth in the Company’s charter, until all shares of the Preferred Stock (having an aggregate of approximately $360.2 million in liquidation preference including accrued and unpaid dividends, as of June 30, 2003) have been redeemed. (See Note 13.)

| **2.** | **Reorganization and Emergence from Chapter 11** |
|--------|--------------------------------------------------|

|                            |
|---------------------------------|
| **Background of Restructuring** |

On January 31, 2002, Old NTL announced that it had appointed professional advisors to advise on strategic and recapitalization alternatives to strengthen its balance sheet, reduce debt and put an appropriate capital structure in place for its business.

Promptly upon obtaining the requisite waivers from the lenders under its credit facilities in March 2002, Old NTL and certain of its subsidiaries commenced negotiations with a steering committee of the unofficial committee of its bondholders and the committee’s legal and financial advisors.

Old NTL and its subsidiaries failed to make interest payments on some of the outstanding notes starting on April 1, 2002. Old NTL also failed to declare or pay dividends on certain series of its outstanding preferred stock due to a lack of available surplus under Delaware law.

On April 16, 2002, Old NTL announced that it and an unofficial committee of its bondholders had reached an agreement in principle on a comprehensive recapitalization of Old NTL and its subsidiaries. To implement the proposed recapitalization plan, on May 8, 2002, Old NTL and certain of the other subsidiaries of Old NTL, namely Parc Holdings, NTL Communications Corp., Diamond Cable Communications Limited, Diamond Holdings Limited and Communications Cable Funding Corp., filed cases and a pre-arranged joint reorganization plan under Chapter 11 of the U.S. Bankruptcy Code. In connection with the filing, some members of the unofficial creditors’ committee of bondholders entered into a credit facility agreement (referred to as the “DIP facility”) committing to provide Communications

 

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Cable Funding Corp. with up to $500.0 million in new debt financing (Parc Holdings committed to provide up to an additional $130.0 million under the DIP facility.)

As a result of the payment defaults, as well as the voluntary filing under Chapter 11 by Old NTL and certain of its subsidiaries, on May 8, 2002, there was an event of default under all of Old NTL and its subsidiaries’ credit facilities and the indentures governing all of their publicly traded debt, other than debt of NTL (Triangle) LLC.

The Plan was confirmed by the Bankruptcy Court on September 5, 2002. During the fall of 2002, Old NTL negotiated with a group of lenders to enter into a new financing arrangement to repay the DIP facility, to repay certain obligations and to provide liquidity to Old NTL and its subsidiaries. The Plan became effective on January 10, 2003, at which time Old NTL emerged from Chapter 11 reorganization. In connection with Old NTL’s emergence from Chapter 11 reorganization, NTL Communications Corp. issued $558.2 million aggregate principal face amount of 19% Senior Secured Notes due 2010 and 500,000 shares of its common stock on January 10, 2003. The proceeds were used in part to repay amounts outstanding under the DIP facility and to purchase from Parc Holdings a £90.0 million note of NTL (UK) Group Inc. and to repay certain other obligations.

| **Liquidity and Capital Resources** |
|-------------------------------------|

The Company emerged from bankruptcy on January 10, 2003, at which time, as part of the reorganization plan, all of its secured debt, common stock and preferred stock were cancelled and new Common Stock and Preferred Stock were issued. Further, upon the consummation of the reorganization plan (after taking into account the redemption for cash of $25 million of the Preferred Stock) the Company had approximately $63 million in cash and its subsidiaries (other than Cablecom) had an additional amount of approximately $11 million in cash. As of June 30, 2003, the Company had approximately $57.3 million in cash and its subsidiaries (other than Cablecom) had an additional amount of approximately $10 million in cash.

The Company is primarily a holding company for the stock of its subsidiaries, with no material independent source of cash proceeds. During 2003, the Company does not anticipate receiving any material cash proceeds from its subsidiaries’ operating activities. Accordingly, the Company expects to fund its operations primarily out of its $57.3 million in cash ($17.2 million of which will be paid as a dividend on the Preferred Stock on October 15, 2003) and its subsidiaries’ cash remaining after the consummation of the reorganization plan. During 2003, the Company does not anticipate borrowing any material amount of funds and the Company does not expect to issue any of its securities for cash. Further, during 2003, the Company does not anticipate any material capital expenses.

The Company expects to either complete a restructuring of the debt and equity of Cablecom, in the near future, which is expected to result in the acquisition of the Company’s interest in Cablecom or a complete dilution of the Company’s ownership interest or, if such restructuring is not successful, to file for the insolvency of Cablecom in Switzerland, which would result in the Company’s having no remaining ownership in Cablecom. The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission.

In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom.

 

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Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

The Company’s management and board are exploring strategic and financial alternatives available to the Company, including the Company’s possible liquidation, a going private transaction and the sale of its remaining assets. In that regard, the board established a special committee charged with reviewing, considering, investigating, evaluating, negotiating and recommending action to the entire board with respect to one or more possible going private transactions. By July 1, 2003, the special committee had retained its own legal counsel and financial advisor to advise it in connection with its duties.

During 2003, the Company’s primary expenses are expected to consist of operating expenses of approximately $13.5 million, including salaries, professional fees, insurance and severance costs, as well as certain funding obligations to certain of its subsidiaries (but not including certain guarantees to the Company’s subsidiaries in the aggregate amount of approximately £4.2 million). Further, after reserving for certain contingent liabilities, to the extent the Company has remaining funds legally available, the Company intends to pay dividends on or redeem shares of its Preferred Stock. In this regard, on September 11, 2003, the Company’s Board of Directors approved a semi-annual dividend of $2.50 per share on the Preferred Stock. However, there is no requirement under our charter to pay any future dividends on our Preferred Stock and there is no assurance that we will pay any such future dividends. (See Note 17 – “Subsequent Events.”) At June 30, 2003, the liquidation preference of Preferred Stock aggregates approximately $360.2 million including accrued and unpaid dividends. In addition, the Preferred Stock is also entitled to mandatory redemption out of the net proceeds of any asset sale for cash that the Company or its subsidiaries complete, subject to some limited exceptions set forth in the Company’s charter. Accordingly, it is highly unlikely that common shareholders will ever receive any distribution related to their shares.

The Company believes that its existing cash and cash equivalents will be sufficient to support its expected operations and fund its capital commitments through at least July 1, 2004, which, as previously noted, will exclude Cablecom.

| **Basis of Presentation** |
|---------------------------|

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the rules and regulations of the Securities and Exchange Commission. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the three and six months ended June 30, 2003 are not necessarily indicative of the results that may be expected for the year ending December 31, 2003. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2002.

The Company operated its business as a debtor-in-possession subject to the jurisdiction of the Bankruptcy Court during the period from May 8, 2002 until January 10, 2003. Accordingly, the Company’s consolidated financial statements for periods prior to its emergence from Chapter 11 reorganization were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”). In

 

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addition, the Company adopted fresh-start reporting upon its emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the effects of the consummation of the Plan as well as adjustments for fresh-start reporting have been recorded in the accompanying unaudited condensed consolidated financial statements as of January 1, 2003.

Pursuant to fresh-start reporting, a new entity was deemed created for financial reporting purposes and the carrying value of assets and liabilities was adjusted. The carrying value of assets was adjusted to their reorganization value that is equivalent to their estimated fair value. The carrying value of liabilities was adjusted to their present value. Since fresh-start reporting materially changed the carrying values recorded in the Company’s consolidated balance sheet, a black line separates the financial statements for periods after the adoption of fresh-start reporting from the financial statements for periods prior to the adoption.

The term “Predecessor Company” refers to the Company and its subsidiaries for periods prior to and including December 31, 2002. The term “Reorganized Company” refers to the Company and its subsidiaries for periods subsequent to January 1, 2003. The effects of the consummation of the Plan as well as adjustments for fresh-start reporting recorded as of January 1, 2003 are Predecessor Company transactions and are presented in the accompanying condensed consolidated statements of operations and cash flows dated January 1, 2003. All other results of operations and cash flows on January 1, 2003 are Reorganized Company transactions.

The Company adopted fresh-start reporting upon its emergence from Chapter 11 reorganization in accordance with SOP 90-7. The Company obtained a valuation to assist in the determination of its reorganization value as defined in SOP 90-7. The Company determined the reorganization value was $2,198.6 million. This determination was based upon various valuation methods, including discounted projected cash flow analysis, selected comparable market multiples of publicly traded companies and other applicable ratios and economic information relevant to the operations of the Company. Certain factors that were incorporated into the determination of the Company’s reorganization value included the following:

|   | • | Reporting unit 10 year cash flow projections; |
|--------|--------|-----------------------------------------------|

|   |   |                                                                |
|--------|--------|---------------------------------------------------------------------|
|   | • | Corporate income tax rates of 30% in the UK and 25% in Switzerland; |

|   |   |                                                                                    |
|--------|--------|-----------------------------------------------------------------------------------------|
|   | • | Present value discount factors of 14.5% and 25%, depending upon the reporting unit; and |

|   |   |                                                                                                                           |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------|
|   | • | Residual value representing the sum of the value beyond 10 years into perpetuity was calculated using the Gordon Growth Model. |

The cash flow projections are based on economic, competitive and general business conditions prevailing when the projections were prepared. They are also based on a variety of estimates and assumptions which, though considered reasonable by management, may not be realized, and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond the Company’s control. A change in the estimates and assumptions about revenue, operating cash flow, tax rates and capital expenditures may have had a significant effect on the determination of the Company’s reorganization value.

The Company determined that its reorganization value computed as of the Effective Date of January 10, 2003 consisted of the following (in millions):

| Present value of discounted cash flows of the emerging entity |   | $      | 1,615.0 |   |
|---------------------------------------------------------------|--------|--------|---------|--------|
| Current assets                                                |   |   | 455.6   |   |
| Other assets                                                  |   |   | 128.0   |   |
|                                                          |   |        |         |   |
| Reorganization value                                          |   | $      | 2,198.6 |   |
|                                                          |   |        |         |   |

 

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The Company adopted fresh-start reporting because the holders of its voting common shares immediately before filing and confirmation of the Plan received less than 50% of the voting shares of the emerging company, and because the Company’s reorganization value is less than its post-petition liabilities and allowed claims, as shown below (in millions):

| Allowed claims:                                         |   |   |    |   |
|---------------------------------------------------------|--------|--------|---------|--------|
| Liabilities subject to compromise                       |   | $      | 4,294.1 |   |
| Post petition liabilities:                              |   |   |    |   |
| Current liabilities (excluding discontinued operations) |   |   | 3,140.2 |   |
| Deferred income taxes                                   |   |   | 226.0   |   |
| Other non current liabilities                           |   |   | 132.7   |   |
|                                                    |   |        |         |   |
|                                                    |   |   | 7,793.0 |   |
| Reorganization value                                    |   |   | 2,198.6 |   |
|                                                    |   |        |         |   |
|                                                    |   | $      | 5,594.4 |   |
|                                                    |   |        |         |   |

The Company realized a gain of $3,962 million in connection with the recapitalization of its debt in accordance with the Plan. This gain has been reflected in the results of operations of the Predecessor Company on January 1, 2003. A summary of the gain on debt discharge follows (in millions):

| Liabilities subject to compromise                   |   |   |    |   |
|-----------------------------------------------------|--------|--------|---------|--------|
| Pre-petition long-term debt subject to compromise   |   | $      | 1,300.0 |   |
| Redeemable preferred stock                          |   |   | 2,853.3 |   |
| Accounts payable and accrued expenses               |   |   | 0.5     |   |
| Interest and dividends payable                      |   |   | 140.3   |   |
|                                                |   |        |         |   |
|                                                |   |   | 4,294.1 |   |
| Unamortized deferred financing costs                |   |   | (37.4   | )      |
|                                                |   |        |         |   |
|                                                |   |   | 4,256.7 |   |
| Cash distributed upon emergence from bankruptcy     |   |   | (188.2  | )      |
| Value of Reorganized Company’s preferred stock |   |   | (106.1  | )      |
| Value of Reorganized Company’s common stock    |   |   | (0.2    | )      |
|                                                |   |        |         |   |
|                                                |   | $      | 3,962.2 |   |
|                                                |   |        |         |   |

|                      |
|---------------------------|
| **Fresh-Start Reporting** |

In accordance with SOP 90-7, the Company adopted the provisions of fresh-start reporting as of January 1, 2003. The following reconciliation of the Predecessor Company’s consolidated balance sheet as of December 31, 2002 to that of the Reorganized Company as of January 1, 2003 gives effect to the emergence from Chapter 11 reorganization and the adoption of fresh-start reporting.

The Company engaged an independent financial advisor to assist in the determination of the reorganization value (or fair value) of substantially all of its assets and the present value of its liabilities. This determination resulted in the fresh-start reporting adjustments to write-down fixed assets and write-up intangible assets to their fair values. In addition, the Company’s total reorganization value exceeded the amounts allocable to identifiable assets that resulted in a new indefinite-lived intangible asset.

The adjustments entitled “Emergence from Chapter 11” reflect the consummation of the Plan, including the cancellation of a substantial portion of the Company’s outstanding debt and the issuance of shares of Common Stock and Preferred Stock to various former creditors and stockholders of Old NTL and certain of its subsidiaries. The adjustments entitled “Fresh-Start” reflect the adoption of fresh-start reporting.

 

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|                                                                                                     |   | **December 31, 2002**      |      |                             |   |                           |   |            |      | **January 1, 2003**        |   |
|----------------------------------------------------------------------------------------------------------|--------|----------------------------|-----------|----------------------------------|--------|--------------------------------|--------|-----------------|-----------|----------------------------|--------|
|                                                                                                     |   | **Predecessor****Company** |      | **Emergence from****Chapter 11** |   | **Discontinued****Operations** |   | **Fresh-Start** |      | **Reorganized****Company** |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
|                                                                                                     |   | **(dollars in millions)**  |      |
| **Assets**                                                                                               |   |                       |      |                             |   |                           |   |            |      |                       |   |   |   |   |   |   |
| Current assets:                                                                                          |   |                       |      |                             |   |                           |   |            |      |                       |   |   |   |   |   |   |
|      Cash and cash equivalents                                                  |   | $                          | 277.5     |                             | $      | (170.9                         | )      | $               | 53.2      |                       | $      | — |   | $ | 159.8 |   |
|      Marketable securities                                                      |   |                       | 17.3      |                             |   | (17.3                          | )      |            | —    |                       |   | — |   |   | — |   |
| Accounts    receivable-trade, less Allowance for doubtful accounts of $9.4                               |   |                       | 243.4     |                             |   | —                         |   |            | —    |                       |   | — |   |   | 243.4 |   |
|      Other                                                                      |   |                       | 50.3      |                             |   | —                         |   |            | —    |                       |   | 2.1 |   |   | 52.4 |   |
|      Discontinued operations                                                    |   |                       | 12,968.1  |                             |   | —                         |   |            | (12,968.1 | )                          |   | — |   |   | — |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
|      Total current assets                                                       |   |                       | 13,556.6  |                             |   | (188.2                         | )      |            | (12,914.9 | )                          |   | 2.1 |   |   | 455.6 |   |
|      Fixed assets, net                                                          |   |                       | 1,682.1   |                             |   | —                         |   |            | —    |                       |   | (507.2 | ) |   | 1,174.9 |   |
|      Goodwill                                                                   |   |                       | 218.7     |                             |   | —                         |   |            | —    |                       |   | (218.7 | ) |   | — |   |
|      Reorganization value in excess of amounts allocable to identifiable assets |   |                       | —    |                             |   | —                         |   |            | —    |                       |   | 217.2 |   |   | 217.2 |   |
|      Customer lists, net of accumulated amortization of $171.4                  |   |                       | 62.8      |                             |   | —                         |   |            | —    |                       |   | 146.8 |   |   | 209.6 |   |
|      Investments and loans to affiliates, net                                   |   |                       | 13.0      |                             |   | —                         |   |            | —    |                       |   | 7.2 |   |   | 20.2 |   |
|      Deferred financing                                                         |   |                       | 37.4      |                             |   | (37.4                          | )      |            | —    |                       |   | — |   |   | — |   |
|      Other assets, net of accumulated amortization of $62.4                     |   |                       | 83.5      |                             |   | —                         |   |            | —    |                       |   | (54.0 | ) |   | 29.5 |   |
|      Deferred tax asset                                                         |   |                       | 195.3     |                             |   | —                         |   |            | —    |                       |   | (103.7 | ) |   | 91.6 |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
|      Total assets                                                               |   | $                          | 15,849.4  |                             | $      | (225.6                         | )      | $               | (12,914.9 | )                          | $      | (510.3 | ) | $ | 2,198.6 |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
| **Liabilities and shareholders’ (deficiency) equity**                                               |   |                       |      |                             |   |                           |   |            |      |                       |   |   |   |   |   |   |
| Liabilities not subject to compromise                                                                    |   |                       |      |                             |   |                           |   |            |      |                       |   |   |   |   |   |   |
| Current liabilities:                                                                                     |   |                       |      |                             |   |                           |   |            |      |                       |   |   |   |   |   |   |
| Accounts payable                                                                                         |   | $                          | 49.3      |                             | $      | —                         |   | $               | —    |                       | $      | 0.3 |   | $ | 49.6 |   |
| Accrued expenses and other                                                                               |   |                       | 92.5      |                             |   | —                         |   |            | —    |                       |   | 1.2 |   |   | 93.7 |   |
| Interest payable                                                                                         |   |                       | 43.5      |                             |   | —                         |   |            | —    |                       |   | — |   |   | 43.5 |   |
| Deferred revenue                                                                                         |   |                       | 235.6     |                             |   | —                         |   |            | —    |                       |   | — |   |   | 235.6 |   |
| Current portion of long-term debt                                                                        |   |                       | 2,719.3   |                             |   | —                         |   |            | —    |                       |   | (1,313.2 | ) |   | 1,406.1 |   |
| Discontinued operations (including liabilities subject to compromise of $10,157.8)                       |   |                       | 17,956.2  |                             |   | —                         |   |            | (17,956.2 | )                          |   | — |   |   | — |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
| Total current liabilities                                                                                |   |                       | 21,096.4  |                             |   | —                         |   |            | (17,956.2 | )                          |   | (1,311.7 | ) |   | 1,828.5 |   |
| Other                                                                                                    |   |                       | 132.7     |                             |   | —                         |   |            | —    |                       |   | (4.7 | ) |   | 128.0 |   |
| Deferred income taxes                                                                                    |   |                       | 226.0     |                             |   | —                         |   |            | —    |                       |   | (90.2 | ) |   | 135.8 |   |
| Liabilities subject to compromise, including redeemable preferred stock                                  |   |                       | 4,294.1   |                             |   | (4,294.1                       | )      |            | —    |                       |   | — |   |   | — |   |
| Mandatorily redeemable preferred stock                                                                   |   |                       | —    |                             |   | 106.1                          |   |            | —    |                       |   | — |   |   | 106.1 |   |
|      Common stock-old                                                           |   |                       | 2.8       |                             |   | —                         |   |            | —    |                       |   | (2.8 | ) |   | — |   |
|      Common stock-new                                                           |   |                       | —    |                             |   | 0.2                            |   |            | —    |                       |   | — |   |   | 0.2 |   |
|      Additional paid-in capital                                                 |   |                       | 13,574.9  |                             |   | —                         |   |            | —    |                       |   | (13,574.9 | ) |   | — |   |
|      Translation adjustment                                                     |   |                       | (830.2    | )                                |   | —                         |   |            | —    |                       |   | 830.2 |   |   | — |   |
|      Retained earnings                                                          |   |                       | (22,647.3 | )                                |   | 3,962.2                        |   |            | 5,041.3   |                       |   | 13,643.8 |   |   | — |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
| Shareholders’ equity (deficiency)                                                                   |   |                       | (9,899.9  | )                                |   | 3,962.4                        |   |            | 5,041.3   |                       |   | 896.3 |   |   | 0.2 |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |
| Total liabilities and shareholders’ equity (deficiency)                                             |   | $                          | 15,849.4  |                             | $      | (225.6                         | )      | $               | (12,914.9 | )                          | $      | (510.3 | ) | $ | 2,198.6 |   |
|                                                                                                     |   |                            |           |                             |        |                                |   |                 |           |                       |        |  |   |  |  |   |

At December 31, 2002, Old NTL had    net operating loss carryforwards of approximately $400 million for U.S. federal    income tax purposes that expire in varying amounts commencing in 2009 and    which are subject to limitations as described below. Old NTL has net operating    loss carryforwards for Swiss tax purposes of approximately $2.5 billion that expire in varying amounts commencing in 2008.

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The Company emerged from Chapter 11 bankruptcy on January 10, 2003. A restructuring of the Company’s debt will give rise to cancellation of indebtedness income (“COD”) in 2003, which will be non-taxable since the debt cancellation is in connection with a bankruptcy reorganization. However, to the extent that such amount is excluded from U.S. taxable income, certain tax attributes are subject to reduction, including certain U.S. net operating loss carryforwards and U.S. capital carryforwards. The reduction of tax attributes should have no material impact on the Company’s financial statement position since the deferred tax assets related to these tax attributes are offset by a corresponding valuation allowance. Furthermore, the reorganization will cause an ownership change pursuant to Internal Revenue Code Section 382. Section 382 will severely limit the Company’s ability to utilize any remaining U.S. net operating loss carryforwards and may limit the Company’s ability to deduct any built-in losses recognized within the subsequent five-year period.

| **3.** | **Pro Forma Financial Information** |
|--------|-------------------------------------|

The following pro forma consolidated balance sheet at June 30, 2003 and the pro forma consolidated income statement for the six months ended June 30, 2003 reflect the likelihood that the Company will not retain a significant interest in Cablecom and that Cablecom will no longer be reported as part of the Company’s consolidated results of operations. As described in more detail in Note 16 (Commitments and Contingent Liabilities – Cablecom), Cablecom has approximately CHF 3,792 million in bank debt (which includes recently accrued interest payments) that initially matured on April 30, 2003 but the lenders have extended such due date until October 31, 2003. Cablecom has insufficient resources to satisfy such obligation. In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law and, accordingly, may be required to file for insolvency proceedings in Switzerland.

Cablecom and its lenders have been in discussions regarding a complete financial restructuring of Cablecom which will, among other things, reduce the amount of bank debt outstanding, extend the maturity date thereof and resolve the Swiss overindebtedness issue. The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission.

In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom. Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

 

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|                                                                                         |   | **June 30,****2003****(Consolidated)** |     | **Discontinued****Operations****(Cablecom)** |   | **Pro Forma****as of****June 30, 2003** |   |
|----------------------------------------------------------------------------------------------|--------|----------------------------------------|----------|----------------------------------------------|--------|-----------------------------------------|--------|
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
|                                                                                         |   | **(amounts in millions)**              |     |
| **Assets**                                                                                   |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Current assets:                                                                              |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Cash and cash equivalents                                                                    |   | $                                      | 148.1    |                                         | $      | (80.9                                   | )      | $ | 67.2 |   |
| Accounts receivable-trade, net                                                               |   |                                   | 73.6     |                                         |   | (55.5                                   | )      |   | 18.1 |   |
| Other                                                                                        |   |                                   | 74.5     |                                         |   | (61.2                                   | )      |   | 13.3 |   |
| Discontinued operations                                                                      |   |                                   | —   |                                         |   | 1,920.3                                 |   |   | 1,920.3 |   |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
| Total current assets                                                                         |   |                                   | 296.2    |                                         |   | 1,722.7                                 |   |   | 2,018.9 |   |
| Fixed assets, net                                                                            |   |                                   | 1,157.3  |                                         |   | (1,154.1                                | )      |   | 3.2 |   |
| Goodwill                                                                                     |   |                                   | —   |                                         |   | —                                  |   |   | — |   |
| Reorganization value in excess of amounts allocable to identifiable assets                   |   |                                   | 221.5    |                                         |   | (220.3                                  | )      |   | 1.2 |   |
| Customer lists, net of accumulated amortization of $5.6                                      |   |                                   | 208.9    |                                         |   | (208.9                                  | )      |   | — |   |
| Investments in and loans to affiliates, net                                                  |   |                                   | 21.0     |                                         |   | (7.9                                    | )      |   | 13.1 |   |
| Deferred tax asset                                                                           |   |                                   | 91.8     |                                         |   | (132.0                                  | )      |   | (40.2 | ) |
| Other assets                                                                                 |   |                                   | 19.3     |                                         |   | 0.5                                     |   |   | 19.8 |   |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
| Total assets                                                                                 |   | $                                      | 2,016.0  |                                         | $      | —                                  |   | $ | 2,016.0 |   |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
|                                                                                         |   |                                   |     |                                         |   |                                    |   |   |   |   |
| **Liabilities and shareholders’ (deficiency)**                                          |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Liabilities not subject to compromise                                                        |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Current liabilities:                                                                         |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Accounts payable                                                                             |   | $                                      | 32.7     |                                         | $      | (23.5                                   | )      | $ | 9.2 |   |
| Accrued expenses and other                                                                   |   |                                   | 68.5     |                                         |   | (36.2                                   | )      |   | 32.3 |   |
| Interest payable                                                                             |   |                                   | 9.6      |                                         |   | (9.6                                    | )      |   | — |   |
| Deferred revenue                                                                             |   |                                   | 145.9    |                                         |   | (143.4                                  | )      |   | 2.5 |   |
| Current portion of long-term debt                                                            |   |                                   | 2,809.6  |                                         |   | (2,809.3                                | )      |   | 0.3 |   |
| Discontinued operations                                                                      |   |                                   | —   |                                         |   | 1,920.3                                 |   |   | 1,920.3 |   |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
| Total current liabilities                                                                    |   |                                   | 3,066.3  |                                         |   | (1,101.7                                | )      |   | 1,964.6 |   |
| Long-term debt                                                                               |   |                                   | —   |                                         |   | —                                  |   |   | — |   |
| Other                                                                                        |   |                                   | 132.3    |                                         |   | (132.3                                  | )      |   | — |   |
| Deferred income taxes                                                                        |   |                                   | 135.3    |                                         |   | (175.6                                  | )      |   | (40.3 | ) |
| Commitments and contingent liabilities                                                       |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Mandatorily redeemable preferred stock                                                       |   |                                   | 114.7    |                                         |   | —                                  |   |   | 114.7 |   |
| Shareholders’ (deficiency)                                                              |   |                                   |     |                                         |   |                                    |   |   |   |   |
| Common    stock – $.01 par value; authorized 20.0 shares; issued and outstanding shares |   |                                   | 0.2      |                                         |   | —                                  |   |   | 0.2 |   |
| Additional paid-in capital                                                                   |   |                                   | —   |                                         |   | —                                  |   |   | — |   |
| Accumulated other comprehensive (loss)                                                       |   |                                   | 3.7      |                                         |   | (3.5                                    | )      |   | 0.2 |   |
| (Deficit)                                                                                    |   |                                   | (1,436.5 | )                                            |   | 1,413.1                                 |   |   | (23.4 | ) |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
|                                                                                         |   |                                   | (1,432.6 | )                                            |   | 1,409.6                                 |   |   | (23.0 | ) |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |
| Total liabilities and shareholders’ equity (deficiency)                                 |   | $                                      | 2,016.0  |                                         | $      | —                                  |   | $ | 2,016.0 |   |
|                                                                                         |   |                                        |          |                                         |        |                                         |   |  |  |   |

 

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      NTL Europe, Inc. and subsidiaries, pro forma income statement reflecting Cablecom as a discontinued operation:

|                                                                           |   | **Six months ended****June 30, 2003**               |       | **Discontinued****Operations** |   | **Pro Forma****as of****June 30, 2003** |   |
|--------------------------------------------------------------------------------|--------|-----------------------------------------------------|------------|--------------------------------|--------|-----------------------------------------|--------|
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
|                                                                           |   |                                                |       | **(unaudited)**                |   |                                    |   |   |
|                                                                           |   | **(dollars in millions, except per share amounts)** |       |
| **Revenues**                                                                   |   | $                                                   | 242.3      |                           | $      | (229.2                                  | )      | $ | 13.1 |   |
| **Costs and expenses**                                                         |   |                                                |       |                           |   |                                    |   |   |   |   |
| Operating expenses (exclusive of depreciation shown separately below)          |   |                                                | 90.9       |                           |   | (81.8                                   | )      |   | 9.1 |   |
| Selling, general and administrative expenses                                   |   |                                                | 69.8       |                           |   | (64.3                                   | )      |   | 5.5 |   |
| Other Charges                                                                  |   |                                                | 3.6        |                           |   | (3.6                                    | )      |   | — |   |
| Corporate expenses                                                             |   |                                                | 9.2        |                           |   | —                                  |   |   | 9.2 |   |
| Depreciation                                                                   |   |                                                | 92.4       |                           |   | (89.4                                   | )      |   | 3.0 |   |
| Amortization                                                                   |   |                                                | 5.5        |                           |   | (5.5                                    | )      |   | — |   |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
|                                                                           |   |                                                | 271.4      |                           |   | (244.6                                  | )      |   | 26.8 |   |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| Operating (loss)                                                               |   |                                                | (29.1      | )                              |   | 15.4                                    |   |   | (13.7 | ) |
| **Other income (expense)**                                                     |   |                                                |       |                           |   |                                    |   |   |   |   |
| Interest income and other, net                                                 |   |                                                | 2.0        |                           |   | (1.9                                    | )      |   | 0.1 |   |
| Interest expense                                                               |   |                                                | (1,398.4   | )                              |   | 1,398.4                                 |   |   | — |   |
| Share of (losses) from equity investments                                      |   |                                                | (1.7       | )                              |   | —                                  |   |   | (1.7 | ) |
| Foreign currency transaction gains (losses)                                    |   |                                                | 0.6        |                           |   | —                                  |   |   | 0.6 |   |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| (Loss) before recapitalization items, income taxes and discontinued operations |   |                                                | (1,426.6   | )                              |   | 1,411.9                                 |   |   | (14.7 | ) |
| Recapitalization items, net                                                    |   |                                                | —     |                           |   | —                                  |   |   | — |   |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| (Loss) before income taxes and discontinued operations                         |   |                                                | (1426.6    | )                              |   | 1,411.9                                 |   |   | (14.7 | ) |
| Income tax benefit (expense)                                                   |   |                                                | (1.3       | )                              |   | 1.2                                     |   |   | (0.1 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| (Loss) from continuing operations                                              |   |                                                | (1,427.9   | )                              |   | 1,413.1                                 |   |   | (14.8 | ) |
| Discontinued operations:                                                       |   |                                                |       |                           |   |                                    |   |   |   |   |
| (Loss) from discontinued operations, net of income tax benefit of $0.7         |   |                                                | —     |                           |   | (1,413.1                                | )      |   | (1,413.1 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| Net (loss)                                                                     |   |                                                | (1,427.9   | )                              |   | —                                  |   |   | (1,427.9 | ) |
| Preferred stock dividends and accretion                                        |   |                                                | (8.6       | )                              |   | —                                  |   |   | (8.6 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| Net (loss) available to common shareholders                                    |   | $                                                   | (1,436.5   | )                              | $      | —                                  |   | $ | (1,436.5 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
| Basic and diluted net (loss) per share:                                        |   |                                                |       |                           |   |                                    |   |   |   |   |
|    (Loss) from continuing operations                            |   | $                                                   | (73.08     | )                              | $      | 71.89                                   |   | $ | (1.19 | ) |
|    (Loss) from discontinued operations                          |   |                                                | —     |                           |   | (71.89                                  | )      | $ | (71.89 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
|    Net (loss) per common share                                  |   | $                                                   | (73.08     | )                              | $      | —                                  |   | $ | (73.08 | ) |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |
|    Weighted average shares                                      |   |                                                | 19,657,433 |                           |   | 19,657,433                              |   |   | 19,657,433 |   |
|                                                                           |   |                                                     |            |                           |        |                                         |   |  |  |   |

|   |                                 |
|--------|--------------------------------------|
| **4.** | **Recent Accounting Pronouncements** |

In May 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 represents a significant change in practice in the accounting for a number of financial instruments, including mandatorily redeemable equity instruments. The Company has evaluated its 10% mandatorily redeemable preferred stock and determined that it meets the definition of a liability as set forth in SFAS No. 150 because it is mandatorily redeemable on a fixed date. Accordingly, as of July 1, 2003, the Company will record the mandatorily redeemable preferred stock as debt, and accrete as interest expense the difference between such amount and the amount that will be payable on the redemption date, January 10, 2023.

 

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In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement is effective for contracts entered into or modified after June 30, 2003. The adoption of this statement is not expected to have a significant effect on the results of operations, financial condition or cash flows of the Company.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), which requires variable interest entities to be consolidated by the primary beneficiary of the entity if certain criteria are met. FIN 46 is effective immediately for all new variable interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 will become effective for the Company during the third quarter of 2003. The Company is presently evaluating whether it will be required to consolidate, beginning July 1, 2003, any of its unconsolidated affiliates presently accounted for using the equity method as a result of the effectiveness of FIN 46.

In November 2002, the Emerging Issues Task Force reached a consensus on EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 is not expected to have a significant effect on the results of operations, financial condition or cash flows of the Company.

In July 2002, FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 replaced Emerging Issues Task Force Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity is recognized when the liability is incurred. Under Issue No. 94-3, a liability for an exit cost as defined is recognized at the date of a commitment to an exit or disposal plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of this standard did not have a significant effect on the results of operations, financial condition or cash flows of the Company.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” effective for the Company on January 1, 2003. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible fixed assets and the associated asset retirement costs. The adoption of this standard did not have a significant effect on the results of operations, financial condition or cash flows of the Company.

| **5.** | **Stock-Based Compensation** |
|--------|------------------------------|

The Company has not issued any stock options or made any stock grants since its reorganization.

The Predecessor Company followed the disclosure-only provisions of Statement of Financial Accounting Standards (“SFAS”) No. 123, “Accounting for Stock-Based Compensation.” The Company applies APB Opinion No. 25, “Accounting for Stock Issued to Employees” and related interpretations in accounting for its stock option plans.

 

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The Predecessor Company’s employees participated in the various stock option plans of Old NTL. All options to purchase shares of the Predecessor Company’s common stock were cancelled on the Effective Date pursuant to the Plan.

Pro forma information regarding net loss has been determined as if the Predecessor Company had accounted for its employee stock options under the fair value method of SFAS No. 123. The fair value for these options was estimated at the date of grant using the Black-Scholes option pricing model with the following weighted-average assumptions for 2003 and 2002; risk-free interest rates of 3.90% and 4.47%, respectively, dividend yield of 0%, volatility factor of the expected market price of the Predecessor Company’s common stock of .638 and .702, respectively, and a weighted-average expected life of the option of 10 years and 10 years, respectively.

The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options, which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions including the expected stock price volatility. Because these stock options have characteristics significantly different from those of traded options and because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its stock options.

For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options’ vesting period. The effects of applying SFAS No. 123 on pro forma disclosures of net loss for the three and six months ended June 30, 2003 were not likely to be representative of the pro forma effects on net loss in future years.

Had compensation for stock options granted by the Predecessor Company been determined consistent with the provisions of SFAS No. 123, the effect on the Predecessor Company’s net loss would have been changed to the following pro forma amounts.

|                                          |   | **Three Months Ended June 30,**          |       | **Six Months Ended June 30,** |   |
|-----------------------------------------------|--------|------------------------------------------|------------|-------------------------------|--------|
|                                          |   | **2003**                                 |       | **2002**                      |   | **2003** |   | **2002** |   |
|                                          |   |                                          |            |                          |   |  |  |   |  |  |   |   |  |  |   |
|                                          |   | **Reorganized****Company**               |       | **Predecessor****Company**    |   | **Reorganized****Company** |   | **Predecessor****Company** |   |
|                                          |   |                                          |            |                          |   |  |  |   |  |  |   |   |  |  |   |
|                                          |   | **(in millions, except per share data)** |       |
| Net loss for common shares, as reported       |   | $                                        | (394.7     | )                             |   | $ | (599.6 | ) | $ | (1,436.5 | ) |   | $ | (1,303.9 | ) |
| Non cash compensation expense                 |   |                                     | —     |                          |   |   | (64.0 | ) |   | — |   |   |   | (128.0 | ) |
| Net loss, pro forma                           |   |                                     | (394.7     | )                             |   |   | (663.6 | ) |   | (1,436.5 | ) |   |   | (1,431.9 | ) |
| Basic and diluted net (loss) per common share |   | $                                        | (20.08     | )                             |   | $ | (2.40 | ) | $ | (73.08 | ) |   | $ | (5.18 | ) |
|                                          |   |                                     |       |                          |   |   |   |   |   |   |   |   |   |   |   |
| Weighted average shares                       |   |                                     | 19,657,433 |                          |   |   | 276,626,475 |   |   | 19,657,433 |   |   |   | 276,626,475 |   |

 

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|   |             |
|--------|------------------|
| **6.** | **Fixed Assets** |

|                     |
|--------------------------|
| Fixed assets consist of: |
|                     |

|                     |   | **June 30,****2003**       |    |   | **December 31,****2002** |   |
|--------------------------|--------|----------------------------|---------|--------|-------------------------------|--------|
|                     |   |                            |         |   |                          |        |  |   |
|                     |   | **Reorganized****Company** |    |   | **Predecessor****Company**    |   |
|                     |   |                            |         |   |                          |        |  |   |
|                     |   | **(unaudited)**            |    |   |                          |   |   |
|                     |   | **(in          millions)** |    |
| Operating equipment      |   | $                          | 1,140.4 |   |                          | $      | 2,109.25 |   |
| Other equipment          |   |                       | 74.9    |   |                          |   | 109.5 |   |
| Construction-in-progress |   |                       | 33.5    |   |                          |   | 25.1 |   |
|                     |   |                            |         |   |                          |        |  |   |
|                     |   |                       | 1,248.8 |   |                          |   | 2,243.8 |   |
| Accumulated depreciation |   |                       | (91.5   | )      |                          |   | (561.7 | ) |
|                     |   |                            |         |   |                          |        |  |   |
|                     |   | $                          | 1,157.3 |   |                          | $      | 1,682.1 |   |
|                     |   |                            |         |   |                          |        |  |   |

The change in fixed assets is primarily the result of the $507.2 million reduction in the carrying value upon the adoption of fresh-start reporting as of January 1, 2003. Substantially all fixed assets relate to Cablecom and, as discussed in more detail in Note 3, Cablecom will not be owned by the Company, nor included in the Company’s balance sheet, in the near future.

| **7.** | **Reorganization value in excess of amounts allocable to identifiable assets** |
|--------|--------------------------------------------------------------------------------|

The reorganization value in excess of amounts allocable to identifiable assets, is comprised of the following:

|                        |   | **Reorganized****Company** |   |
|-----------------------------|--------|----------------------------|--------|
|                        |   |                            |        |   |
| Balance at January 1, 2003  |   | $                          | 217.2  |   |
| Effects of foreign currency |   |                       | 4.3    |   |
|                        |   |                            |        |   |
| Balance at June 30, 2003    |   | $                          | 221.5  |   |
|                        |   |                            |        |   |

The reorganization value in excess of amounts allocable to identifiable assets relate substantially to Cablecom and, as discussed in more detail in Note 3, Cablecom will not be owned by the Company, nor included in the Company’s balance sheet, in the near future.

| **8.** | **Customer Lists** |
|--------|--------------------|

The valuation of the Company’s customer lists were:

|                     |   | **June 30,****2003**       |   |   | **December 31,****2002** |   |
|--------------------------|--------|----------------------------|--------|--------|-------------------------------|--------|
|                     |   |                            |        |   |                          |        |  |   |
|                     |   | **Reorganized****Company** |   |   | **Predecessor****Company**    |   |
|                     |   |                            |        |   |                          |        |  |   |
|                     |   | **(unaudited)**            |   |   |                          |   |   |
|                     |   | **(in          millions)** |   |
| Customer lists           |   | $                          | 214.5  |   |                          | $      | 234.2 |   |
| Accumulated depreciation |   |                       | (5.6   | )      |                          |   | (171.4 | ) |
|                     |   |                            |        |   |                          |        |  |   |
|                     |   | $                          | 208.9  |   |                          | $      | 62.8 |   |
|                     |   |                            |        |   |                          |        |  |   |

The change in customer lists is primarily the result of the $146.8 million increase in the carrying value upon the adoption of fresh-start reporting as of January 1, 2003. The customer lists relate solely to

 

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Cablecom and, as discussed in more detail in Note 3, Cablecom will not be owned by the Company, nor included in the Company’s balance sheet, in the near future.

The estimated amortization expense for customer lists is approximately $9.7 million per year, for each of the next five years.

| **9.** | **Investments in and Loans to Affiliates – Reorganized Company** |
|--------|-----------------------------------------------------------------------|

All investments in which the Company has the ability to exercise significant influence over the investee, but less than a controlling voting interest, are accounted for using the equity method. Equity method investments are recorded at original cost and adjusted periodically to recognize the Company’s proportionate share of the investees’ net income or losses after the date of investment, additional contributions made and dividends received. Prior to the adoption of SFAS No. 142, the difference between the Company’s recorded investment and its proportionate interest in the book value of the investees’ net assets were being amortized on a straight-line basis over 10 years. The Company evaluates the carrying value of its equity method investments and tests for impairment in accordance with APB Opinion No. 18.

Investments in which the Company does not have the ability to exercise significant influence (less than 20% ownership) are accounted for on the cost method.

The Company’s investments in and loans to affiliates are as follows:

|                     |   | **June 30, 2003**      |   |
|--------------------------|--------|------------------------|--------|
|                     |   |                        |        |   |
|                     |   | **(in millions)** |   |
| Total equity investments |   | $                      | 13.1   |   |
| Total cost investments   |   |                   | 7.9    |   |
|                     |   |                        |        |   |
| Total                    |   | $                      | $21.0  |   |
|                     |   |                        |        |   |

The following is a description of the Company’s major investments, listed by subsidiary:

| **Premium TV Limited** |
|------------------------|

Premium TV, a wholly-owned subsidiary of Parc Holdings, is obliged to provide funding of up to approximately £29 million ($48.6 million), at June 30, 2003, to fund various of its joint venture and other contractual interests. Of this amount, the payment of approximately £17 million ($27.5 million) has been guaranteed by Parc Holdings. If Premium TV fails to provide its committed funding under the relevant shareholder arrangements relating to these joint ventures, Premium TV and, in respect of the guaranteed amounts, Parc Holdings, may be sued for non- payment. As a result of the recapitalization process, the relevant joint venture partners may assert that they can compulsorily acquire Premium TV’s interest in the relevant joint venture at a third party appraisal valuation. Premium TV is currently in discussions with certain of these joint venture partners with a view to restructuring the relevant joint ventures. In the event that these discussions do not reach a resolution acceptable to Premium TV, Premium TV may seek to discontinue these joint ventures and terminate their activities.

On September 24, 2002, Premium TV, Parc Holdings and Old NTL agreed to vary the terms of the long-term joint venture (referred to as the Football League Joint Venture) between Premium TV and the Football League Limited. Under the terms of the variation, upon the payment of arrears of rights fees by Premium TV, the Football League Limited agreed to release Premium TV from its obligation to fund the payment of any further rights fees to the Football League Limited’s member teams and its obligation to

 

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provide working capital funding    to the Football League Joint Venture. The Football League Limited also agreed    to release Parc Holdings from its guarantee of Premium TV’s obligations and to release Old NTL from the related undertaking. In return, Premium TV agreed to waive repayment of loan capital by the Football League Joint Venture and to provide certain ongoing services to the Football League Joint Venture free of charge for an initial period. Parc Holdings deposited £10.33 million into a designated single purpose account for use by Premium TV to finance the provision of such services. Premium TV and the Football League Limited also agreed to new terms relating to the distribution of revenues generated by the Football League Joint Venture. The remaining balance in the account at June 30, 2003 was £5.75 million (and £8.88 million at December 31, 2002) and is included in “Other Assets” in the accompanying consolidated balance sheet.

The Company has also guaranteed the obligations of one of its subsidiaries to provide funding of up to approximately £4.2 million ($6.8 million) to a joint venture whose business is the provision of programming content. If the relevant subsidiary fails to provide such funding, under the shareholder arrangements relating to this joint venture, such subsidiary may be sued for damages. In addition, under the shareholder arrangements relating to this joint venture, the relevant joint venture partner may have the option to compulsorily acquire the Company’s indirect interest in the relevant joint venture at 70% of fair market value, resulting in the Company selling its indirect interest at a potential loss. The Company intends to negotiate with its joint venture partner to address these issues. These negotiations may not be successful and the Company may not be able to retain its current interest in this joint venture company. The relevant subsidiary has ceased doing business and currently is in the process of being wound up.

The following is a brief description of the Company’s minority holdings. The Company does not believe that these holdings, alone or in the aggregate, represent material assets.

| **Two Way TV Limited** |
|------------------------|

The Company has an equity interest of approximately 38.5% in Two Way TV Limited. Two Way TV is a UK market leader in interactive and enhanced television. Enhanced television allows viewers to participate in popular games, sporting events and reality television programs. Viewers can vote, guess answers and compete with studio contestants by using a remote control device for the set top box in all digital delivery platforms.

Two Way TV has three product lines: eTV applications for broadcasters, eTV technology licensing and support services for networks and a 24-hour games channel which carries Two Way TV proprietary games.

| **10.** | **Investments in and Loans to Affiliates – Predecessor Company** |
|---------|-----------------------------------------------------------------------|

During 2002, in addition to the Company’s equity and cost investments at Premium TV and its investment in Two Way TV Limited (which are more fully described in Note 9), the Predecessor Company had investments in various companies and joint ventures which were also accounted for under either the equity method or the cost method. The Company’s additional equity investments (in 2002) included its 27% interest in Noos S.A., a French broadband company, which offers analog and digital cable television, high speed Internet and telephone services, its 50% interest in eKabel InvestCo, which owns 65% of iesy Hessen GmbH (“iesy”), the largest cable television network in the German province of Hessen, and its 34.01% interest in B2 Bredband AB (publ) (“B2”), a company based in Sweden, which provides access to a broadband network that provides transmission, both to and from the customer, at the same speed and at the same time.

During 2002, Old NTL’s share of Noos losses reduced the investment therein to zero. On the Effective Date, the Company released its 27.1% interest (the “Noos Interest”) in Suez Lyonnaise Télécom (“Noos”) to France Telecom as part of a compromise and settlement under the terms of the Plan. Pursuant to the

 

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terms of the Plan, the Noos Interest was released to France Telecom in exchange for (i) the cancellation of the shares of Variable Coupon Redeemable Preferred Stock, Series A of Old NTL and shares of Fixed Coupon Redeemable Preferred Stock, Series A of Old NTL, (ii) the waiver by France Telecom of its rights to any distribution on account of its claims as a holder of Old NTL and Parc Holdings 5% convertible subordinated notes, (iii) the release by France Telecom of any contingent payments due to France Telecom pursuant to the 1G Protocol and Convention Agreement, dated May 6, 1999 (the “1G Franchises”) and the transfer of the 1G Franchises by Old NTL to Noos, and (iv) a $25 million payment by France Telecom to the Company on the Effective Date.

On November 3, 2002, Old NTL, Parc Holdings, and Brigadoon Ventures, Inc., a wholly-owned subsidiary of Parc Holdings, entered into an agreement, whereby (1) Old NTL was entitled to receive a cash facilitation fee for its cooperation in the restructuring of iesy and its subsidiaries (but not in consideration of certain of Old NTL’s subsidiaries’ indirect equity stake in iesy) of approximately $1.3 million, less such subsidiaries’ pro rata share of expenses and (2) such subsidiaries were entitled to receive a release of possible liabilities and claims arising out of their indirect equity stake in iesy, including claims alleged by certain holders of notes of iesy in the bankruptcy. The transactions contemplated by the iesy agreement closed in January 2003. In addition to the Company’s share of iesy’s losses, share of losses from equity investments includes a non-cash write-down of the investment in iesy of $40.6 million in 2002.

| **B2 Bredband AB (publ)** |
|---------------------------|

On April 15, 2002, a funding request for approximately $20 million was received by Old NTL under the terms of the investment agreement relating to Old NTL’s investment in B2. Old NTL informed B2 and the other principal investors that it was not in a position to comply with the request for funding. The B2 investment agreement provides that if Old NTL fails to provide such funding, it may be sued for non-payment and arguably could lose certain rights under the B2 shareholders’ agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject the B2 investment agreement and shareholders’ agreement under section 365 of the bankruptcy code, and the bankruptcy court subsequently authorized Old NTL’s rejection of the agreements. On November 8, 2002, B2 and the other principal shareholders filed proofs of claim with the bankruptcy court asserting their right to recover: (1) approximately $20 million from Old NTL in respect of the unpaid funding request; (2) unspecified damages for Old NTL’s failure to perform under the relevant agreements; and (3) unspecified costs and expenses incurred in the exercise of their remedies under the agreements, and reserved their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, Parc Holdings, together with its subsidiaries NTL Sweden SPV Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement with B2 and the other principal shareholders of B2 relating to, among other things, the transfer of the Company’s securities in B2. Under the agreement, the NTL Europe parties have agreed to transfer their interest in B2 to certain other shareholders of B2 in exchange for approximately $375,000 in cash or certain securities of a B2 affiliate and mutual releases among the parties relating to a dispute stemming from an April 15, 2002 funding request for approximately $20 million. In connection with the mutual releases, the agreement provides that B2 and the other principal shareholders will withdraw, or otherwise assist Parc Holdings in obtaining bankruptcy court denial of, the proofs of claim filed by B2 and the other principal shareholders in the bankruptcy court. The closing of this transaction took place in May 2003.

 

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The Predecessor Company’s investments in and loans to affiliates are as follows:

|                     |   | **December 31, 2002** |   | **June 30, 2002** |   |
|--------------------------|--------|-----------------------|--------|-------------------|--------|
|                     |   | **Ownership**         |   | **Balance**       |   | **Ownership** |   | **Balance** |   |
|                     |   |                       |        |              |        |  |   |  |  |   |  |  |   |
|                     |   | **(in millions)**     |   |
| Noos                     |   |                  | 27.00  | %                 | $      | — |   |   | 27.00 | % | $ | 18.1 |   |
| B2                       |   |                  | 34.01  | %                 |   | — |   |   | 34.01 | % |   | 76.0 |   |
| Iesy                     |   |                  | 32.50  | %                 |   | — |   |   | 32.50 | % |   | 49.6 |   |
| Others                   |   |                  |   |              |   | 4.7 |   |   |   |   |   | 56.0 |   |
|                     |   |                  |   |              |        |   |   |   |   |  |   |
| Total equity investments |   |                  |   |              |   | 4.7 |   |   |   |   |   | 199.7 |   |
| Total cost investments   |   |                  |   |              |   | 8.3 |   |   |   |   |   | 7.6 |   |
|                     |   |                  |   |              |        |   |   |   |   |  |   |
| Total                    |   |                  |   |              | $      | 13.0 |   |   |   |   | $ | 207.3 |   |
|                     |   |                  |   |              |        |   |   |   |   |  |   |

The Predecessor Company had reclassified $18.3 million of credit balances to “Other Long-Term Liabilities,” (at December 31, 2002) which related to investments where the Company has funding commitments and losses to date, which have exceeded the Company’s investment.

| **11.** | **Liabilities Subject to Compromise** |
|---------|---------------------------------------|

Liabilities subject to compromise consist of the following:

|                                               |   | **June          30,      2003** |   |   | **December 31, 2002**      |   |
|----------------------------------------------------|--------|---------------------------------|--------|--------|----------------------------|--------|
|                                               |   | **Reorganized****Company**      |   |   | **Predecessor****Company** |   |
|                                               |   |                                 |        |   |                       |        |  |   |
|                                               |   | **(unaudited)**                 |   |   |                       |   |   |
|                                               |   | **(in millions)**               |   |
| Account payable                                    |   | $                               | — |   |                       | $      | 0.3 |   |
| Interest payable                                   |   |                            | — |   |                       |   | 30.4 |   |
| Dividends payable                                  |   |                            | — |   |                       |   | 109.9 |   |
| Accrued expenses                                   |   |                            | — |   |                       |   |  0.2 |
| Redeemable preferred stock:                        |   |                            |   |   |                       |   |   |   |
| Cumulative Convertible Preferred Stock             |   |                            | — |   |                       |   | 2,077.3 |   |
| Variable Coupon Redeemable Preferred Stock         |   |                            | — |   |                       |   | 484.2 |   |
| 6.5% Redeemable Preferred Stock                    |   |                            | — |   |                       |   | 98.4 |   |
| 13% Senior Redeemable Exchangeable Preferred Stock |   |                            | — |   |                       |   | 193.4 |   |
| Long term debt:                                    |   |                            |   |   |                       |   |   |   |
| NTL Europe, Inc.:                                  |   |                            |   |   |                       |   |   |   |
| 53⁄4% Convertible Subordinated Notes            |   |                            | — |   |                       |   | 100.0 |   |
| NTL Delaware, Inc.:                                |   |                            |   |   |                       |   |   |   |
| 53⁄4% Convertible Subordinated Notes            |   |                            | — |   |                       |   | 1,200.0 |   |
|                                               |   |                                 |        |   |                       |        |  |   |
| Total                                              |   | $                               | — |   |                       | $      | 4,294.1 |   |
|                                               |   |                                 |        |   |                       |        |  |   |

Upon emergence from Chapter 11 reorganization and in accordance with the Plan, all of the outstanding preferred stock of the Company and long-term debt of the Company and Parc Holdings was cancelled.

| **12.** | **Long-Term Debt** |
|---------|--------------------|

Long-term debt, exclusive of amounts subject to compromise, consisted of:

|                                  |   | **June          30,      2003** |     |   | **December 31, 2002**      |   |
|---------------------------------------|--------|---------------------------------|----------|--------|----------------------------|--------|
|                                  |   | **Reorganized****Company**      |     |   | **Predecessor****Company** |   |
|                                  |   | **(in millions)**               |     |
| Cablecom:                             |   |                            |     |   |                       |   |   |   |
| Term Loan Facility                    |   | $                               | 2,014.3  |   |                       | $      | 1,951.8 |   |
| Revolving Facility                    |   |                            | 787.1    |   |                       |   | 762.7 |   |
| Other                                 |   |                            | 5.0      |   |                       |   | 4.8 |   |
|                                  |   |                                 |          |   |                       |        |  |   |
|                                  |   |                            | 2,806.4  |   |                       |   | 2,719.3 |   |
| Less: Fair value adjustment           |   |                            | (1,341.8 | )      |                       |   | — |   |
| Plus: Debt Accretion to June 30, 2003 |   |                            | 1,345.0  |   |                       |   | — |   |
|                                  |   |                                 |          |   |                       |        |  |   |
|                                  |   |                            | 2,809.6  |   |                       |   | — |   |
| Less current portion                  |   |                            | (2,809.6 | )      |                       |   | (2,719.3 | ) |
|                                  |   |                                 |          |   |                       |        |  |   |
|                                  |   | $                               | —   |   |                       | $      | — |   |
|                                  |   |                                 |          |   |                       |        |  |   |

 

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Under the provisions of Fresh Start Accounting, the Reorganized Company recorded the Cablecom debt at its estimated fair value, resulting in a gain on January 1, 2003 of $1,341.8 million. Substantially all of Cablecom’s debt was due on April 30, 2003 (although subsequent extensions granted by Cablecom’s lenders have delayed the maturity date to October 31, 2003). During 2003, the Reorganized Company was required to accrete Cablecom’s outstanding debt back to its full face value at its maturity date (April 30, 2003). Therefore, during the first six months of 2003, the Reorganized Company charged Interest Expense for approximately $1,345.0 million to reflect the accreted value of the Cablecom debt at June 30, 2003.

In March 2000, Cablecom borrowed CHF 2,700.0 million ($1,951.8 million) at December 31, 2002 under its term loan facility in connection with the acquisition of the Cablecom business. Interest is payable at least every six months at Swiss LIBOR plus a margin rate of 2.5% per annum, which is subject to adjustment. The effective interest rate was 3.51% at December 31, 2002. Although the term loan facility was originally scheduled to mature on April 30, 2003, upon the request of Cablecom, the maturity date has been extended to October 31, 2003.

Cablecom had the option to draw on a revolving facility of up to an additional CHF 1,400 million. The amount available had been capped at CHF 1,055 million although the availability may be increased with the consent of the requisite majority of the lenders. At December 31, 2002, Cablecom had borrowed CHF 1,055.0 million ($762.7 million) and Cablecom has subsequently borrowed an additional CHF 37 million for accrued interest payments. Interest is payable at least every six months at Swiss LIBOR plus a margin rate of 2.5% per annum, which is subject to adjustment. The effective rate of interest was 3.71% at December 31, 2002. The unused portion of the commitment is subject to a commitment fee of 0.75% payable quarterly, which is reduced to 0.50% when over 50% of the commitment is utilized. Although the revolving facility was originally scheduled to mature on April 30, 2003, upon the request of Cablecom, the maturity date has been extended to October 31, 2003.

As described in more detail in Note 16, Cablecom does not have sufficient resources to satisfy these bank obligations. In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law and, accordingly, may be required to file for insolvency proceedings in Switzerland. Cablecom and its lenders have been involved in ongoing discussions regarding a complete financial restructuring of Cablecom which will, among other things, reduce the amount of bank debt outstanding, extend the maturity date thereof and resolve the Swiss overindebtedness issue. The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission.

In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom. Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

 

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|    |                                       |
|---------|--------------------------------------------|
| **13.** | **Mandatorily Redeemable Preferred Stock** |

The Company’s charter authorizes the issuance of 8,000,000 shares of 10% Fixed Coupon Redeemable Preferred Stock, par value $0.01 per share. Approximately 7,364,000 shares of the Preferred Stock were issued and outstanding on the Effective Date of the Plan prior to the redemption of $25 million of liquidation preference of the Preferred Stock pursuant to the Plan. Immediately after such redemption, approximately $343 million of liquidation preference of the Preferred Stock remains outstanding (plus an additional approximate $17.2 million of accrued and unpaid dividends as of June 30, 2003), which is equal to 6,864,000 shares of Preferred Stock. The redemption date of such mandatorily redeemable preferred stock is January 10, 2023.

Each share of the Fixed Coupon Redeemable Preferred Stock entitles its holder to receive cumulative dividends, when, as and if declared by the board of directors, out of funds legally available for the payment of dividends. With respect to those dividends, the Preferred Stock will rank senior to all classes of the Company’s Common Stock.

Dividends are payable at the semi-annual rate of $2.50 per share (subject to adjustment for stock splits, stock dividends, combinations, recapitalizations or other similar transactions) payable by the Company in cash. Dividends on the Preferred Stock are payable on a pro rata basis with respect to shares of the Preferred Stock in arrears on June 30 and December 31 of each year (commencing on June 30, 2003) and are cumulative at a 10% annual rate and are compounded on a semi-annual basis until paid or satisfied in full from the date of issue whether or not they have been declared and whether or not there are profits, surplus or other funds legally available for the payment of such dividends.

No dividends or distributions may be declared, made, paid or set apart for payment upon any of the Company’s stock ranking on parity with the Preferred Stock, nor may any stock ranking on parity with the Preferred Stock be redeemed, purchased or otherwise acquired for any consideration (or any monies paid to or made available for a sinking fund for the redemption of any parity securities) by the Company (except by conversion into or exchange for the Company’s stock ranking on parity with the Preferred Stock) unless, in each case: (i) full cumulative dividends on all outstanding shares of the Preferred Stock have been paid or set apart for payment for all dividend payment periods terminating on or prior to the date of the declaration, payment, redemption, purchase or other acquisition and (ii) the Company is not in default with respect to any obligation to redeem the Preferred Stock. Notwithstanding the foregoing, if the Company is not in default with respect to any redemption of shares of the Preferred Stock, dividends may be declared and paid or set apart for payment on shares of parity securities if, dividends declared upon shares of the Preferred Stock and all dividends declared upon any parity securities are declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the Preferred Stock and accumulated and unpaid on such parity securities.

| **14.** | **Comprehensive Loss** |
|---------|------------------------|

The Company’s comprehensive loss was as follows:

|                                  |   | **Three          Months Ended June 30,** |   |   | **Six          Months Ended June 30,** |   |
|---------------------------------------|--------|-----------------------------------------------|--------|--------|---------------------------------------------|--------|
|                                  |   | **2003**                                      |   |   | **2002**                                    |   |   | **2003** |   |   | **2002** |   |
|                                  |   |                                               |        |   |                                        |        |  |   |   |  |  |   |   |  |  |   |
|                                  |   | **Reorganized****Company**                    |   |   | **Predecessor****Company**                  |   |   | **Reorganized****Company** |   |   | **Predecessor****Company** |   |
|                                  |   |                                               |        |   |                                        |        |  |   |   |  |  |   |   |  |  |   |
|                                  |   | **(in millions of dollars)**                  |   |
| Net loss for the period               |   | $                                             | (390.5 | )      |                                        | $      | (556.1 | ) |   | $ | (1,427.9 | ) |   | $ | (1,162.0 | ) |
| Currency translation adjustments      |   |                                          | 13.6   |   |                                        |   | 362.8 |   |   |   | 3.5 |   |   |   | (754.6 | ) |
| Unrealized gain (loss) on investments |   |                                          | — |   |                                        |   | (2.1 | ) |   |   | — |   |   |   | (17.1 | ) |
| Unrealized gain (loss) on derivatives |   |                                          | 2.6    |   |                                        |   | (7.3 | ) |   |   | 0.2 |   |   |   | (23.4 | ) |
|                                  |   |                                               |        |   |                                        |        |  |   |   |  |  |   |   |  |  |   |
|                                  |   | $                                             | (374.3 | )      |                                        | $      | (202.7 | ) |   | $ | (1,424.0 | ) |   | $ | (1,957.1 | ) |
|                                  |   |                                               |        |   |                                        |        |  |   |   |  |  |   |   |  |  |   |

 

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|    |                           |
|---------|--------------------------------|
| **15.** | **Related Party Transactions** |

On June 23, 2003, the Company’s board held a meeting in which they discussed the exploration of a going private transaction and the formation of a special committee to consider alternatives in a going private transaction. By action taken by unanimous written consent on June 23, 2003, the board established a special committee with Michael Cochran, a member of the board, as its sole, independent member. The board charged the special committee with reviewing, considering, investigating, evaluating, negotiating and recommending action to the entire board with respect to one or more possible going private transactions. By July 1, 2003, the special committee had retained its own legal counsel, McKenna Long & Aldridge LLP, and financial advisor, Morgan Joseph & Co. Inc., to advise it in connection with its duties. Since March 2003, Sean Mathis, a director of the Company, has been affiliated with Morgan Joseph & Co. Inc. Mr. Cochran has advised the Company that, effective September 15, 2003, he will become Of Counsel to McKenna Long & Aldridge LLP.

On the Effective Date, the Company entered into a Transitional Services Agreement with New NTL. Under the Transitional Services Agreement, New NTL has agreed to provide the Company with certain administrative and technical support for a limited period of time where its personnel had previously been providing support to the companies now comprised within the Company’s group of companies. New NTL has agreed to provide the Company with support if and when requested in the following areas: accounting, payroll and financial reporting support, technical and purchasing assistance to the Company’s Spanish business, access to New NTL’s internal legal and tax advisors with respect to historic matters and continued support in the management and monitoring of certain of the joint ventures in which the Company has investments. This agreement provides that New NTL’s employees shall, as appropriate, prioritize work performed for New NTL ahead of work performed on behalf of the Company.

In addition, under the Transitional Services Agreement, New NTL provided the services of five of its employees (two of which provided services as of June 30, 2003) to the Company seconded on a full-time basis for a period of up to two years (at the Company’s option) and permits the Company and its group of companies to continue to use the “NTL” name for a period of up to one year, in the case of NTL Europe, and three years, in the case of certain other of its subsidiaries.

The Company pays New NTL pre-determined charges set out in the Transitional Services Agreement in respect of the services provided by New NTL and its subsidiaries under the agreement based on the amount of time spent by the relevant personnel in carrying out such work.

On September 28, 2001, NTL Communications Corp. loaned Old NTL $150.0 million in cash and received 15.0% Promissory Notes due September 30, 2004. Interest was payable monthly in cash at a rate of 15.0% per annum beginning on October 31, 2001. Upon emergence from Chapter 11 reorganization and in accordance with the Plan, these notes were cancelled.

On April 5, 2002, following receipt of the proceeds from the sale of NTL Australia, Parc Holdings loaned £90.0 million to NTL (UK) Group, Inc. Such loan was actually made (with the approval of the lenders under the UK credit facilities) to NTL (UK) Group, Inc. and then on-lent to certain subsidiaries of NTL (UK) Group, Inc. Interest on the note was at 23% per annum, compounded semiannually, and was payable, in cash, on the earlier of April 1, 2006 or the redemption date of the notes. In connection with the DIP facility, the current interest rate on this loan had been reduced from 23% per annum to 11% per annum. Upon emergence from Chapter 11 reorganization and in accordance with the Plan, such debt was repaid.

Pursuant to the DIP facility, all funding needs of the debtors were funded through the proceeds of the DIP facility, in accordance with a budget and the terms of the DIP facility agreement. Communications Cable

 

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Funding Corp. had entered into intercompany note agreements with Old NTL and Parc Holdings to evidence such transactions. The notes earned interest on the unpaid principal amount for three months from July 15, 2002 at the rate of 11% per annum. With respect to each successive three month period following that date, the rate per annum increased incrementally by 1% over the immediately preceding three month period but will not exceed 18% per annum for any three month period. Upon emergence from Chapter 11 reorganization and in accordance with the Plan, such debt in the amount of $69.3 million was repaid.

Certain former officers and directors of Old NTL were also officers and directors of ATX Communications, Inc. (“ATX”) (formerly known as CoreComm Holdco, Inc.). On April 12, 2001, Old NTL purchased $15.0 million of an unsecured convertible note from ATX and received warrants to purchase 770,000 shares of ATX common stock at an exercise price of $0.01 per share that expire in April 2011. In addition, concurrently with the note purchase and without additional compensation, Old NTL entered into a network and software agreement with ATX. Under the agreement, ATX will provide U.S. network for Internet traffic from Old NTL’s UK customers for three years, as well as a royalty free license to use certain billing and provisioning software and know-how. Interest on the notes is at 10.75% per annum, payable semiannually beginning on October 15, 2001. The interest is payable in kind by the issuance of additional notes in such principal amount equal to the interest payment that is then due. The notes are convertible into ATX common stock prior to maturity at a conversion price of $1.00 per share, subject to adjustment. Additional notes issued for interest will have an initial conversion price equal to 120% of the weighted average closing price of ATX common stock for a specified period. Old NTL and ATX agreed to certain modifications to the conversion feature in connection with ATX’s recapitalization in December 2001.

Premium TV has entered into a number of agreements with New NTL, pursuant to which Premium TV receives certain operational services covering premises, connectivity, hosting, technology and other corporate volume purchasing benefits. Premium TV has a co-marketing agreement linked with New NTL’s broadband product and an agreement with New NTL where New NTL is able to exploit Premium TV’s pay per view rights.

In 1999, NTL Broadcast established two subsidiaries, located in Thailand and Malaysia. Following consummation of the Plan, the Company maintained ownership of the operations in Malaysia and Thailand through two companies, NTL Broadcast Sdn and NTL Broadcast (Thailand) Ltd. (together, “NTL Asia”). The two subsidiaries are managed as one business. Separately, New NTL maintains a branch office in Singapore. The Company’s subsidiaries rely on New NTL’s Singapore office for administration and other support services. The Company has entered into an agreement to jointly NTL Asia with New NTL.

| **16.** | **Commitments and Contingent Liabilities** |
|---------|--------------------------------------------|

The Company is involved in certain disputes and litigation arising in the ordinary course of its business. With the possible exception of the specific items discussed below, none of the matters are expected to have a material adverse effect on the Company’s financial position, results of operations or cash flows.

 

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| **Morgan Stanley** |
|--------------------|

In connection with the bar date for filing of securities laws claims against the debtors pursuant to an order of the bankruptcy court, proofs of claim were filed against Old NTL, Parc Holdings and NTL Communications by Morgan Stanley Senior Funding Inc. for $11.4 million. These claims were asserted by Morgan Stanley Senior Funding Inc. in respect of alleged unpaid financing fees for commitments of capital made in 1999. The Company believes it has meritorious defenses to these claims and on May 8, 2003 filed an objection to these claims. At this time, the Company cannot predict the outcome of these claims.

| **B2 Bredband AB (publ)** |
|---------------------------|

On April 15, 2002, a funding request for approximately $20 million was received by Old NTL under the terms of the investment agreement relating to Old NTL’s investment in B2. Old NTL informed B2 and the other principal investors that it was not in a position to comply with the request for funding. The B2 investment agreement provides that if Old NTL fails to provide such funding, it may be sued for non-payment and arguably could lose certain rights under the B2 shareholders’ agreement including its interest in B2.

On October 4, 2002, Old NTL filed a motion with the bankruptcy court to reject the B2 investment agreement and shareholders’ agreement under section 365 of the bankruptcy code, and the bankruptcy court subsequently authorized Old NTL’s rejection of the agreements. On November 8, 2002, B2 and the other principal shareholders filed proofs of claim with the bankruptcy court asserting their right to recover: (1) approximately $20 million from Old NTL in respect of the unpaid funding request; (2) unspecified damages for Old NTL’s failure to perform under the relevant agreements; and (3) unspecified costs and expenses incurred in the exercise of their remedies under the agreements, and reserved their other rights to avail themselves of any remedies under the agreements.

On April 30, 2003, Parc Holdings, together with its subsidiaries NTL Sweden SPV Inc. and Nogenta Swedish Acquisition Holding B.V., entered into an agreement with B2 and the other principal shareholders of B2 relating to, among other things, the transfer of the Company’s securities in B2. Under the agreement, the NTL Europe parties have agreed to transfer their interest in B2 to certain other shareholders of B2 in exchange for approximately $375,000 in cash or certain securities of a B2 affiliate and mutual releases among the parties relating to a dispute stemming from an April 15, 2002 funding request for approximately $20 million. In connection with the mutual releases, the agreement provides that B2 and the other principal shareholders will withdraw, or otherwise assist Parc Holdings in obtaining bankruptcy court denial of, the proofs of claim filed by B2 and the other principal shareholders in the bankruptcy court. The closing of this transaction took place in May 2003.

| **Cablecom** |
|--------------|

Cablecom is the principal borrower under an amended and restated credit agreement dated as of April 30, 2002 and effective as of May 2, 2002. Under the credit agreement, Cablecom and one of its subsidiaries are indebted in an amount of approximately CHF 3,792 million (which includes recent accrued interest payments). Although the credit facility was originally scheduled to mature on April 30, 2003, upon the request of Cablecom, the maturity date has been extended to October 31, 2003. In addition, Cablecom has been notified by the lenders that it is in default under the credit agreement. Accordingly, the lenders could seek to accelerate the maturity of the credit facility at any time.

Cablecom does not have the resources to repay the bank debt when it comes due, whether on the extended maturity date or upon the acceleration thereof. Further, as security for its guaranty of Cablecom’s obligations under the credit agreement, NTL Cablecom Holding GmbH, the parent entity of Cablecom, has pledged to the lenders all of the shares of Cablecom. Accordingly, upon the maturity of the credit

 

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facility, whether upon acceleration or otherwise, the lenders could seek to exercise their rights under the pledge. In such an event, although the Company would not be liable for any of Cablecom’s obligations, it would be deprived of all of its ownership interest in Cablecom.

In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law. If Cablecom is unsuccessful in consummating a transaction with its lenders to resolve that “overindebtedness” issue in the near future, the board of directors of Cablecom may be required to file for insolvency proceedings under Swiss law. Further, on April 9, 2003, in accordance with Swiss law, the board of directors of Cablecom received a letter from its auditors, Ernst & Young AG, notifying the board of Cablecom that Cablecom and some of its subsidiaries are “overindebted” and, if there is no consensual settlement on the overall financial restructuring of Cablecom or an extension of the maturity date or any other measures taken which would cure the “overindebtedness,” the board would be required to notify a Swiss court and deposit the balance sheets for Cablecom and its subsidiaries immediately, thereby commencing insolvency proceedings. If Cablecom files for insolvency proceedings, it is unlikely that the Company will retain any interest in Cablecom.

In order to seek to address the foregoing issues, Cablecom is currently in negotiations with its lenders regarding an overall financial restructuring of Cablecom. If consummated, such restructuring is expected to include a reduction in the amount of debt outstanding, an extension of maturity date of such debt and control of Cablecom being assumed by the lenders. The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission.

In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom. Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

| **Owl Creek** |
|---------------|

On May 1, 2003, Owl Creek Asset Management, L.P., one of Old NTL’s creditors, filed an amended complaint against CRT Capital Group LLC, New NTL and the Company in U.S. Bankruptcy Court for the Southern District of New York. The amended complaint concerns certain “when-issued” trades of New NTL’s common stock made by Owl Creek with CRT prior to a subsequent modification of Old NTL’s plan of reorganization. Under the modified plan, Old NTL’s creditors were entitled to receive only one-fourth the number of shares of New NTL common stock contemplated prior to the modification. Therefore, certain holders of New NTL common stock sold more stock on the “when-issued” market than they ultimately received under the amended plan. On January 16, 2003, the bankruptcy court entered an order providing that sellers of New NTL’s common stock on the “when-issued” market may settle such trades by reducing the number of shares traded in each such transaction by 25% and increasing the per

 

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share purchase price for such shares by 400%. The order provided that buyers in such trades were required to accept such a settlement, but the order was dissolved on February 5, 2003. In addition to its claims against CRT, Owl Creek has asserted claims against New NTL and the Company for breach of fiduciary duty, gross negligence, breach of contract, promissory estoppel, contribution and indemnification, alleging that Old NTL’s creditors should have been better informed of the changes to New NTL’s common stock under the plan. Owl Creek has subsequently voluntarily dismissed its complaint against the Company without prejudice to recommencement in state court where related litigation against other parties is pending.

| **Newcastle United** |
|----------------------|

Premium TV is engaged in litigation relating to a dispute with one of its joint venture partners, Newcastle United plc. On March 14, 2003, Newcastle United served notice to terminate its joint venture agreement with Premium TV on the grounds of Premium TV’s alleged insolvency. Premium TV is vigorously defending its position. On April 28, 2003, Premium TV itself issued court proceedings applying for a declaration that it was solvent. If Premium TV is unsuccessful in its litigation, Newcastle United would have the right to purchase Premium TV’s 50% interest in the joint venture at 50% of the appraised market value of the joint venture.

| **German Channel Providers** |
|------------------------------|

On July 29, 2003, Cablecom received a letter of counsel acting for German channel providers SAT 1, ProSieben and Kabel 1 requesting payment of a total of CHF 13,324,827. The channel providers have threatened to institute proceedings against Cablecom if Cablecom refused to pay the amount as requested, which equals the total amount that the respective channel providers have paid to Cablecom for the distribution of a Swiss advertising spilt over Cablecom’s network since 1996.

The channel providers claim that the current contractual compensation, in form of a percentage fee on the advertising revenues, would be abusively high and therefore constitute a breach of Swiss competition law. They refer to the recent decision by the Swiss Competition Commission ordering preliminary measures in proceedings between Teleclub and Cablecom and holding that Cablecom has a dominant position on the market for the distribution of TV signals to Swiss customers.

Following external legal advice and in order to protect long term interests of Cablecom, Cablecom has decided to refuse to repay any amounts received. It can therefore be expected that German channel providers will shortly initiate legal proceedings. Same or similar action has been announced by a second group of German channel providers has been obtained yet.

| **17.** | **Subsequent Events** |
|---------|-----------------------|

On September 11, 2003, the Company’s Board of Directors approved a semi-annual dividend of $2.50 per share on the Preferred Stock. The Company has approximately 6,864,000 shares of preferred stock outstanding, so the aggregate dividend will be approximately $17,160,000. The record date of the dividend on the preferred stock will be September 30, 2003 and the payment date will be October 15, 2003. However, there is no requirement under our charter to pay any future dividends on our Preferred Stock and there is no assurance that we will pay any such future dividends.

 

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| **Item 2.** |
|-------------|

|                                                                                           |
|------------------------------------------------------------------------------------------------|
| **MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS** |

The following discussion of our financial    condition and results of operations should be read in conjunction with our    financial statements and the related notes in Item 1. This discussion contains    forward-looking statements. Please see “Risk Factors” contained    in this Form 10-Q.

| **Overview** |
|--------------|

We currently have the following indirect wholly-owned operating subsidiaries:

| • | NTL Premium TV Holdings Corp., our sports TV content and internet business |
|--------|----------------------------------------------------------------------------|

|   |                                                                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Cablecom GmbH, our cable business in Switzerland, ownership of most of which we are unlikely to retain (See “Risk Factors – Risk Factors Relating to Cablecom”) |

|   |                                                                        |
|--------|-----------------------------------------------------------------------------|
| • | NTL Lanbase, SL, our LAN/WAN installation business located in Madrid, Spain |

|   |                                                                                                                           |
|--------|--------------------------------------------------------------------------------------------------------------------------------|
| • | NTL Broadcast (Thailand) Ltd. and NTL Broadcast Sdn Ltd., our Asian broadcast infrastructure, services and consulting business |

We currently have minority interests in the following operating entities:

| • | Two Way TV Limited, an interactive television service provider |
|--------|----------------------------------------------------------------|

|   |                                                                 |
|--------|----------------------------------------------------------------------|
| • | ITV News Channel Limited, a 24-hour news channel located in the U.K. |

Our most significant holdings are currently being restructured and we will be reviewing all of our holdings to determine the most appropriate course of action. Our board of directors and management are exploring the strategic and financial alternatives available to us. Some alternatives may include, among others, our restructuring around one or more of our existing business units, a sale of assets, a going private transaction or the ultimate liquidation and winding up of our operations and the distribution of available proceeds to our stockholders. In this regard, our board established a special committee with Michael Cochran, a member of the board, as its sole, independent member to review, consider, investigate, evaluate, negotiate and recommend action to the entire board with respect to one or more possible going private transactions.

We may not receive any proceeds from any of these transactions after the payment of outstanding debt that some of these companies may owe and any fees and expenses incurred in connection with these transactions. See, in particular, “Risk Factors – Risk Factors Relating to Cablecom.” To the extent we receive cash proceeds from any asset sale we or our subsidiaries complete, the 10% Fixed Coupon Redeemable Preferred Stock, Series A, par value $0.01 per share (with a $50.00 liquidation preference per share) (the “Preferred Stock”) will be entitled to mandatory redemption in a like amount, subject to some limited exceptions set forth in our charter, until all shares of the Preferred Stock (having an aggregate of $343 million in liquidation preference plus an additional approximate $17.2 million of accrued and unpaid dividends as of June 30, 2003) have been redeemed. Given the liquidation preference on the Preferred Stock and

 

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the anticipated value of our assets, it is unlikely that any such liquidation will generate any proceeds or distributions to the holders of our common stock.

|   |   | ***Separation from NTL Incorporated; Fresh Start Accounting*** |
|--------|--------|----------------------------------------------------------------|

On January 10, 2003, the company then known as NTL Incorporated (“Old NTL”) emerged from bankruptcy protection and consummated its reorganization plan. Through this reorganization plan, Old NTL was separated into two independent companies, effective January 10, 2003. One company, which assumed the name “NTL Incorporated,” holds substantially all of Old NTL’s assets in the United Kingdom and Ireland (“New NTL”). Our company, which assumed the name “NTL Europe, Inc.,” is the other entity that was created and we hold various assets in Europe and elsewhere.

With the separation of Old NTL into two entities, the majority of the significant assets and holdings of Old NTL were retained by New NTL. Generally, other than Cablecom (which itself is being restructured, See “Risk Factors – Risk Factors Relating to Cablecom”), our assets are not material compared to those of New NTL. As discussed below, in the near future, we expect our interest in Cablecom to be reduced to, at most, a small minority position. Further, as discussed above, our board of directors and management are exploring the strategic and financial alternatives available to us. Accordingly, the historical financial statements of Old NTL for periods prior to January 1, 2003, are not particularly reflective of our current and anticipated future business and should not be relied upon as indicative of our future performance.

Cablecom has approximately CHF 3,792 million in bank debt (which includes recently accrued interest payments) that matured on April 30, 2003. Cablecom’s lenders have extended such due date until October 31, 2003. However, Cablecom has insufficient resources to satisfy such obligation. In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law and, accordingly, may be required to file for insolvency proceedings in Switzerland. Cablecom and its lenders have been in discussions regarding a complete financial restructuring of Cablecom and, on June 19, 2003, Cablecom’s board of directors had been advised that 100% of its lenders and other holders of economic interests in Cablecom’s bank debt have agreed upon the principal terms and parameters for the restructuring of that debt.

The principal terms for the financial restructuring are:

|   | • | The outstanding principal amount of the debt would be reduced from approximately CHF 3.8 billion to approximately CHF 1.7 billion. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|

|   |   |                                                                                                                                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | The facility would be split into two tranches, one with a final maturity date of December 31, 2009 and one with a final maturity date of June 30, 2010. |

|   |   |                                                                                                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Cablecom’s lenders would acquire control of substantially all of Cablecom’s share capital, with our remaining interest being acquired by certain members of the new shareholder group. |

|   |   |                                                                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | At the time of the consummation of the restructuring, the additional equity capital would be raised through a rights offering to the new shareholder group. |

The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission. In the event that the proposed restructuring is completed, we expect that our remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, we expect to be deprived of all our

 

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ownership interest in Cablecom. Accordingly, we anticipate that, in the near future, the results of Cablecom will no longer be reported as part of our consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to us. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of our subsidiaries which hold, directly or indirectly, the shares of the Cablecom group. As a result, our financial statements which include the assets and results of Cablecom may not necessarily reflect our results of operations, financial position and cash flows in the future.

Old NTL operated its business as a debtor-in-possession subject to the jurisdiction of the Bankruptcy Court during the period from May 8, 2002 until January 10, 2003. Accordingly, Old NTL’s consolidated financial statements for periods prior to its emergence from Chapter 11 reorganization were prepared in accordance with the American Institute of Certified Public Accountants Statement of Position 90-7, “Financial Reporting by Entities in Reorganization Under the Bankruptcy Code” (“SOP 90-7”). In addition, we adopted fresh-start reporting upon our emergence from Chapter 11 reorganization in accordance with SOP 90-7. For financial reporting purposes, the effects of the consummation of the bankruptcy plan as well as adjustments for fresh-start reporting have been recorded in our unaudited condensed consolidated financial statements as of January 1, 2003.

Pursuant to fresh-start reporting, a new entity was deemed created for financial reporting purposes and the carrying value of our assets and liabilities was adjusted. The carrying value of our assets was adjusted to their reorganization value that is equivalent to their estimated fair value. The carrying value of our liabilities was adjusted to their present value.

| ***Application of Critical Accounting Policies and Estimates*** |
|-----------------------------------------------------------------|

Our consolidated financial statements and related financial information are based on the application of generally accepted accounting principles in the United States. GAAP requires the use of estimates, assumptions, judgments and subjective interpretations of accounting principles that have an impact on the assets, liabilities, revenue and expense amounts reported, as well as disclosures about contingencies, risk and financial condition. The following critical accounting policies have the potential to have a more significant impact on our financial statements, either because of the significance of the financial statement item to which they relate, or because they require more judgment and estimation due to the uncertainty involved in measuring, at a specific point in time, transactions which are continuous in nature.

| • | We maintain allowances for doubtful accounts and notes receivable for estimated losses resulting from the potential inability of our customers or the other parties to make payments. These allowance are estimated based on the current aging of receivables, prior collection experience and future expectations of conditions that might impact the collectibility. If the financial condition of our customers or the other parties were to deteriorate resulting in an impairment in their ability to make payments, additions to the allowances may be required. |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Our determination of the treatment of contingent liabilities in the financial statements is based on a view of the expected outcome of the applicable contingency. We consult legal counsel on matters related to litigation. We also consult with experts both within and outside our company with respect to other matters that arise in the ordinary course of business. Examples of such matters that are based on assumptions, judgments and estimates are the amount to be paid to terminate certain agreements and the amounts to be paid to settle certain other liabilities. A liability is accrued if the likelihood of an adverse outcome is probable of occurrence and the amount is estimable. |

|   |                                                                                                                                                                                                 |
|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | We review long-lived assets and goodwill for impairment as described in the Notes to Consolidated Financial Statements, included in the Company’s Annual Report on Form 10-K for the year ended |

 

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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     |
|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | December 31, 2002. We obtained a valuation to assist with the determination of the fair value of long-lived assets and goodwill. In analyzing potential impairments, projections of future cash flows from the asset are used. The projections are based on assumptions, judgments and estimates of growth rates for the related business, anticipated future economic, regulatory and political conditions, the assignment of discount rates relative to risk and estimates of terminal values. Changes to these variables in the future may necessitate impairment charges to reduce the carrying value to fair value. |

|   |                                                                                                                                                                                                                                                                                                                                |
|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | Fixed assets and intangible assets are assigned useful lives which impact the annual depreciation and amortization expense. The assignment of useful lives involves significant judgments and the use of estimates. Changes in technology or changes in intended use of these assets may cause the estimated useful life to change. |

|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                           |
|--------|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| • | The valuation of our pension plans requires the use of assumptions and estimates that are used to develop actuarial valuations of expenses, projected benefit obligations and funding requirements. These assumptions include, among others, discount rates, investment returns and projected salary increases. Changes in assumptions and future investment returns could potentially have a material impact on our pension expense and funding requirements. |

|                      |
|---------------------------|
| **Results of Operations** |

The following results of operations    include our continuing operations. Although we do not expect Cablecom to    be included in our consolidated results in the future (See “Risk Factors – Risk    Factors Relating to Cablecom”), because Cablecom is currently one of    our wholly-owned subsidiaries, these results of operations include Cablecom.

| **For the Three Months Ended June 30, 2003, as Compared to the Comparable Second Quarter of 2002.** |
|-----------------------------------------------------------------------------------------------------|

Revenue, for the three months ended June 30, 2003, increased 22.4 percent to $122.7 million from $100.2 million in 2002. The increase in revenue is primarily due to the effect of the strength of the Swiss Franc against the U.S. dollar for the quarter presented, as well as increases in television subscribers, broadband revenues and business systems customers, at our Cablecom unit, which more than offset the effects of reduced revenues at Premium TV. Revenue from our other businesses also reflected growth in the comparable period but only account for approximately two percent of our consolidated revenue for the current quarter. Premium TV’s revenues, in local currency, decreased by approximately 50 percent and reflected the loss of ITV Digital’s programming revenue for British Eurosport (when ITV Digital filed for bankruptcy), and reductions in the stream of revenue due to a change in its agreement with the Football League (which altered various terms of the financial aspects of the joint venture with the league). During the quarters ended June 30, 2003 and 2002, Cablecom accounted for 95 percent and 85 percent, respectively, of our consolidated revenue.

Operating expenses (excluding depreciation, which is discussed below) totaled $46.7 million for the second quarter of 2003, and reflected an increase of $8.7 million (or 22.9 percent) over the amount reported for the three months ended June 30, 2002. In local currency, Cablecom reported an 8.4 percent increase in its operating expenses, due to its support of its increased revenue. Cablecom’s operating expenses as a percentage of its revenue, in local currency, decreased to 36.6 percent for the second quarter of 2003 from 37.4 percent for last year’s second quarter. Premium TV’s operating expenses decreased (in both local currency and U.S. dollars) as a result of staffing cutbacks and the reduction in media rights charges as rights contracts expired. During the three months ended June 30, 2003 and 2002, Cablecom accounted for 91 percent and 85 percent, respectively, of our consolidated operating expenses.

Selling, general and administrative expenses decreased by $11.3 million during the second quarter of 2003 over the amount reported for the three months ended June 30, 2002. In local currency,

 

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Cablecom’s selling, general and administrative expenses as a percent of sales increased to 30.0 percent in the second quarter of 2003 from 25.4 percent for the prior year’s comparable quarter. This increase was required to support its additional revenue base. Premium TV reported a significant decrease in selling, general and administrative expenses reflecting Premium TV’s cost reduction program during 2002.

Premium TV recorded an asset impairment charge of approximately $12.9 million during the second quarter of 2002, reflecting the write down of various long-term assets. There was no such charge for the three months ended June 30, 2003.

Other charges totaled $2.4 million in the second quarter of 2002 and related to the information technology integration program at Cablecom, which was substantially completed during the first quarter of 2003.

Corporate expenses totaled $4.5 million for the three months ended June 30, 2003, which reflects a modest increase from the $4.3 million reported in the comparable 2002 quarter.

Depreciation expense for the second quarter of the year totaled $46.7 million, which is approximately $2.3 million lower than last year’s second quarter amount of $49.0 million. However, in local currency, Cablecom’s depreciation for the second quarter of the year reflected a reduction of approximately four percent due to the adoption of “Fresh Start Accounting” and the related reduction in the carrying value of Cablecom’s depreciable fixed assets.

Amortization expense during the second quarter of 2003 decreased by 84 percent to $3.0 million from $18.9 million for the second quarter of the prior year. The decrease is due to the change in the amount of and amortizable life of the value of the customer lists at Cablecom due to the adoption of “Fresh Start Accounting” at our Cablecom unit.

Interest income and other income and expense, net was $2.1 million of net income for the three months ended June 30, 2003, reflecting a change of $5.5 million from the $3.4 million of net expense reported for last year’s second quarter. The change is due to a reduction in losses recorded on our investments carried on the cost basis of accounting and a reduction in other expenses.

Interest expense for the second quarter of the year is comprised of two elements. One relates to the normal interest expense incurred during the second quarter of the year on the Company’s face value of its outstanding debt, and amounted to $24.9 million. The second element of the interest expense figure, for the three months ended June 30, 2003, relates to the accretion (during the second quarter) on the Cablecom debt. Under the provisions of Fresh Start Accounting, the Company recorded the Cablecom debt at its estimated fair value, resulting in a gain on the write-down of Cablecom’s outstanding debt on January 1, 2003 of $1,341.8 million. Substantially all of Cablecom’s debt was due on April 30, 2003 (although subsequent extensions granted to Cablecom by its lenders have delayed the maturity date to October 31, 2003). During the first four months of 2003, the Company was required to accrete Cablecom’s outstanding debt back to its full face value at its original maturity date (April 30, 2003). Therefore, during the first quarter of 2003, the Company charged interest expense for approximately $1,006.6 million to reflect the accreted value of the Cablecom debt at March 31, 2003, with the balance of the accretion recorded during the month of April 2003. Interest expense for the three months ended June 30, 2002 totaled $39.1 million. This compares to the current year’s interest expense of $24.9 million (prior to the accretion of the Cablecom debt to its face value, as discussed above). This reduction primarily reflects the interest expense recorded during a portion of the second quarter of 2002 on the Predecessor Company’s outstanding publicly traded notes which were subsequently cancelled (along with the outstanding interest payment obligations) upon the effective date of the bankruptcy plan. The decrease also reflected lower interest rates on the Cablecom credit facility during the periods presented.

 

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Share of losses from equity investments totaled $1.3 million during the second quarter of 2003, as compared to $37.5 million in the comparable 2002 quarter. The losses during the second quarter of 2002 primarily related to the Predecessor Company’s investments in B2 and Noos, which were substantially written off by December 31, 2002.

Foreign currency transaction gains (losses) was a gain of $0.1 million for the three months ended June 30, 2003 as compared to a (net) gain of $2.2 million in 2002. The change is primarily due to the effect of changes in exchange rates on receivables denominated in non-U.S. dollar currencies held by subsidiaries whose functional currency is the U.S. dollar.

There were no charges for recapitalization items, net in the second quarter of the year versus a charge of $8.0 million for the comparable quarter in the prior year.

We reported an income tax expense    of $0.6 million for the second quarter of 2003, versus a tax benefit of $14.7    million in last year’s  second quarter. This change is primarily attributable to a reduction in the    amount of tax benefit recognized for the current year losses, to the extent    such losses would not reduce existing deferred tax liabilities.

Loss from discontinued operations totaled $408.4 million (net of income tax benefits of $6.3 million) in the second quarter of 2002. Losses from discontinued operations included NTL Communications Corp. and subsidiaries, NTL Australia and Rediffusion (a subsidiary of Cablecom).

| **For the Six Months Ended June 30, 2003, as Compared to the Comparable Period of 2002.** |
|-------------------------------------------------------------------------------------------|

Revenue, for the first six months of 2003, increased 28.3 percent to $242.3 million from $188.8 million in 2002. The increase in revenue is primarily due to the effect of the strength of the Swiss Franc against the U.S. dollar for the period presented, as well as, increases in television subscribers, broadband revenues and business systems customers, at our Cablecom unit, which more than offset the effects of reduced revenues at Premium TV. Revenue from our other businesses also reflected growth in the comparable period but only account for approximately two percent of our consolidated revenue for the current quarter. Premium TV’s revenues, in local currency, decreased by approximately 50 percent and reflected the loss of ITV Digital’s programming revenue for British Eurosport (when ITV Digital filed for bankruptcy), and reductions in the stream of revenue due to a change in its agreement with the Football League (which altered various terms of the financial aspects of the joint venture with the league). During the first six months of 2003 and 2002, Cablecom accounted for 95 percent and 89 percent, respectively, of our consolidated revenue.

Operating expenses (excluding depreciation, which is discussed below) totaled $90.9 million for the first half of 2003, and reflected an increase of $8.7 million (or 10.6 percent) over the amount reported for the first six months of 2002. In local currency, Cablecom’s operating expenses for the first six months of the year, approximated the amount reported for the first half of 2002. This is the result of cost reduction programs offsetting the increased costs required to support its increased revenue. Cablecom’s operating expenses as a percentage of its revenue, in local currency, decreased to 35.7 percent for the first half of 2003 from 40.0 percent for the first six months of 2002. Premium TV’s operating expenses decreased (in both local currency and U.S. dollars) as a result of staffing cutbacks and the reduction in media rights charges as rights contracts expired. During the six months ended June 30, 2003 and 2002, Cablecom accounted for 90 percent and 81 percent, respectively, of our consolidated operating expenses.

Selling, general and administrative expenses decreased by $2.0 million during the first half of 2003 over the amount reported for the six months ended June 30, 2002. In local currency, Cablecom’s selling, general and administrative expenses as a percent of sales increased to 28.1 percent in 2003 from 24.1 percent for the prior year’s six months ended June 30, 2002. This increase was required to support its addition sales volume. Premium TV reported a significant decrease in selling, general and administrative expenses reflecting Premium TV’s cost reduction program during 2002.

 

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Premium TV recorded an asset impairment charge of approximately $12.9 million during the first half of 2002, reflecting the write down of various long-term assets. There was no such charge for the six months ended June 30, 2003.

Other charges totaled $3.6 million for the first six months of 2003 and approximated last year’s charge of $3.4 million for the comparable period. These charges related to the information technology integration program at Cablecom, which was substantially completed during the first quarter of 2003.

Corporate expenses totaled $9.2 million for the six months ended June 30, 2003, as compared to $11.2 million for the first six months of the prior year. The decrease in corporate expenses for the period reflects a general decrease in corporate spending due to a reduction of staff and spending for legal, accounting and professional fees, during the comparable periods.

Depreciation expense for the first six months of the year totaled $92.4 million, which is approximately $2.5 million lower than last year’s six month total of $94.9 million. However, in local currency, Cablecom’s depreciation for the period reflected a reduction of approximately four percent due to the adoption of “Fresh Start Accounting” and the related reduction in the carrying value of Cablecom’s depreciable fixed assets.

Amortization expense for the six months ended June 30, 2003 decreased by 85 percent to $5.5 million from $36.7 million for the comparable 2002 period. The decrease is due to the change in the amount of and amortizable life of the value of the customer lists at Cablecom due to the adoption of “Fresh Start Accounting” at our Cablecom unit.

Interest income and other income and expense, net was $2.0 million of net income for the six months ended June 30, 2003, reflecting a reduction of $5.9 million from the amount reported for the first six months of 2002. The change is due to a reduction in interest income and losses recorded on our investments carried on the cost basis of accounting and a reduction in expenses of a miscellaneous nature.

Interest expense for the first six months of the year is comprised of two elements. One relates to the normal interest expense incurred during the period on the Company’s face value of its outstanding debt, and amounted to $53.5 million. The second element of the interest expense figure, for the six months ended June 30, 2003, relates to the accretion on the Cablecom debt. Under the provisions of Fresh Start Accounting, the Company recorded the Cablecom debt at its estimated fair value, resulting in a gain on the write-down of Cablecom’s outstanding debt on January 1, 2003 of $1,341.8 million. Substantially all of Cablecom’s debt was due on April 30, 2003 (although subsequent extensions granted to Cablecom by its lenders have delayed the maturity date to October 31, 2003). During the first four months of 2003, the Company was required to accrete Cablecom’s outstanding debt back to its full face value at its original maturity date (April 30, 2003). Therefore, during the first six months of 2003, the Company charged interest expense for approximately $1,341.8 million to reflect the accreted value of the Cablecom debt at April 30, 2003. Interest expense for the six months ended June 30, 2002 totaled $86.0 million. This compares to the current year’s interest expense of $53.5 million (prior to the accretion of the Cablecom debt to its face value, as discussed above). This reduction primarily reflects the interest expense recorded during 2002 on the Predecessor Company’s outstanding publicly traded notes which were subsequently cancelled (along with the outstanding interest payment obligations) upon the effective date of the bankruptcy plan. The decrease also reflected lower interest rates on the Cablecom credit facility during the periods presented.

Share of losses from equity investments totaled $1.7 million for the first six months of 2003, as compared to $86.7 million for the comparable 2002 period. The losses during 2002 primarily related to the Predecessor Company’s investments in B2 and Noos, which were substantially written off by December 31, 2002.

 

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Foreign currency transaction gains (losses) was a gain of $0.6 million for the six months ended June 30, 2003 as compared to a (net) gain of $2.2 million in 2002. The change is primarily due to the effect of changes in exchange rates on receivables denominated in non-U.S. dollar currencies held by subsidiaries whose functional currency is the U.S. dollar.

There were no charges for recapitalization items, net during the first six months of the current year, versus charges of $21.7 million for the comparable period in the prior year.

We reported an income tax provision    of $1.3 million for the first six months of 2003, versus a tax benefit of    $25.5 million for the six months ended June 30, 2002. This change is primarily    attributable to a reduction in the amount of tax benefit recognized for the    current year losses, to the extent  such losses would not reduce existing deferred tax liabilities.

Loss from discontinued operations totaled $878.9 million (net of income tax benefits of $18.8 million) for the first six months of 2002. Losses from discontinued operations included NTL Communications Corp. and subsidiaries, NTL Australia and Rediffusion (a subsidiary of Cablecom).

| **Liquidity and Capital Resources** |
|-------------------------------------|

We emerged from bankruptcy on January 10, 2003, at which time, as part of the reorganization plan, all of our secured debt, common stock and preferred stock was cancelled and new common stock and Preferred Stock was issued. Further, upon the consummation of the reorganization plan (after taking into account the redemption for cash of $25 million of our Preferred stock), we had approximately $63 million in cash and our subsidiaries (other than Cablecom) had an additional amount of approximately $11 million in cash. As of June 30, 2003, we had approximately $57.3 million in cash and our subsidiaries (other than Cablecom) had an additional amount of approximately $10 million in cash.

We are primarily a holding company for the stock of our subsidiaries, with no material independent source of cash proceeds. During 2003, we do not anticipate receiving any material cash proceeds from our subsidiaries’ operating activities. Accordingly, we expect to fund our operations primarily out of our cash of approximately $57.3 million ($17.2 million of which will be paid as a dividend on our Preferred Stock on October 15, 2003) and our subsidiaries’ (other than Cablecom) cash of approximately $11 million remaining after the consummation of the reorganization plan. During 2003, we do not anticipate borrowing any material amount of funds and we do not expect to issue any of our securities for cash. Further, during 2003, we do not anticipate any material capital expenditures.

We expect to either complete a restructuring of the debt and equity of Cablecom, in the near future, which is expected to result in the acquisition of our interest in Cablecom or a dilution of our ownership interest to less then five percent or, if this restructuring is not successful, to file for the insolvency of Cablecom in Switzerland, which would result in our having no remaining ownership in Cablecom. In either of these events, the lenders under Cablecom’s credit facility would have no legal recourse to any assets of the NTL Europe group, other than to the shares of Cablecom, certain assets of the Cablecom group and certain assets of our subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

In the event that the proposed restructuring is completed, the Company expects that its remaining interest in Cablecom will be acquired for an amount not in excess of $15 million. If such proposed restructuring is unsuccessful, the Company expects to be deprived of all its ownership interest in Cablecom. Accordingly, the Company anticipates that, in the near future, the results of Cablecom will no longer be reported as part of the Company’s consolidated results of operations. In that regard, it should also be noted that, in accordance with the terms of the existing Cablecom credit agreement, no dividends or distributions have ever been or will be made by Cablecom to the Company. Further, the lenders under Cablecom’s credit facility have no legal recourse to any assets of the NTL Europe group, other than to the

 

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shares of Cablecom, certain assets of the Cablecom group and certain assets of the Company’s subsidiaries which hold, directly or indirectly, the shares of the Cablecom group.

Our management and board are exploring strategic and financial alternatives available to us, including our possible liquidation, a going private transaction and the sale of our remaining assets. In this regard, our board established a special committee with Michael Cochran, a member of the board, as its sole, independent member to review, consider, investigate, evaluate, negotiate and recommend action to the entire board with respect to one or more possible going private transactions. During 2003, our primary expenses are expected to consist of operating expenses, including salaries, professional fees, insurance and severance costs, as well as certain funding obligations to certain of our subsidiaries of approximately $13.5 million (but not including certain guarantees to our subsidiaries in the aggregate amount of approximately £4.2 million). (See Note 16 - “Commitments and Contingencies”). Further, after reserving for certain contingent liabilities, to the extent we have remaining funds legally available, we intend to pay dividends on or redeem shares of our Preferred Stock. In this regard, on September 11, 2003, our Board of Directors approved a semi-annual dividend of $2.50 per share on the Preferred Stock. However, there is no requirement under our charter to pay any future dividends on our Preferred Stock and there is no assurance that we will pay any such future dividends. (See Note 17 – “Subsequent Events.”) The liquidation preference of Preferred Stock aggregates $343 million plus an additional approximate $17.2 million of accrued and unpaid dividends as of June 30, 2003. In addition, our Preferred Stock is also entitled to mandatory redemption out of the net proceeds of any asset sale for cash that we or our subsidiaries complete, subject to some limited exceptions set forth in our charter. Accordingly, it is highly unlikely that common shareholders will ever receive any distribution related to their shares.

We believe that our existing cash and cash equivalents will be sufficient to support our expected operations and fund our capital commitments through at least July 1, 2004, which, as previously noted, will exclude Cablecom.

|   | ***Contractual Obligations and Commercial Commitments*** |
|--------|----------------------------------------------------------|

The following table includes aggregate information about our contractual obligations as of June 30, 2003, as adjusted to give effect to our emergence from Chapter 11 reorganization, and the periods in which payments are due. The following table includes Cablecom which, as discussed elsewhere in the Form 10-Q, is not expected to be included in our consolidated results in the near future. Cablecom’s total long-term debt, operating lease commitments and unconditional purchase obligations, included in the table below, were $2,809.3 million, $31.5 million and $60.6 million, respectively.

 

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|                                   |   |                      |    | **Less          than****1          Year** |   | **1-3****Years** |   | **4-5****Years** |   |  **After****5    Years** |   |
|----------------------------------------|--------|---------------------------|---------|-------------------------------------------|--------|------------------|--------|------------------|--------|-------------------------------|--------|
| **Contractual            Obligations** |   | **Total**                 |    |                                      |   |             |   |
|                                        |   |                           |         |                                      |        |                  |   |                  |        |                          |        |  |   |  |  |   |
|                                   |   | **(dollars in millions)** |    |
| Long-Term Debt                         |   | $                         | 2,809.3 |                                      | $      | 2,809.3          |   | $                | — |                          | $      | — |   | $ | — |   |
| Capital Lease Obligations              |   |                      | —  |                                      |   | —           |   |             | — |                          |   | — |   |   | — |   |
| Operating Leases                       |   |                      | 33.8    |                                      |   | 5.0              |   |             | 11.5   |                          |   | 10.8 |   |   | 6.5 |   |
| Unconditional Purchase Obligations     |   |                      | 91.4    |                                      |   | 34.6             |   |             | 25.7   |                          |   | 3.0 |   |   | 28.1 |   |
| Other Long-Term Obligations            |   |                      | —  |                                      |   | —           |   |             | — |                          |   | — |   |   | — |   |
|                                   |   |                           |         |                                      |        |                  |   |                  |        |                          |        |  |   |  |  |   |
| Total Contractual Cash Obligations     |   | $                         | 2,934.5 |                                      | $      | 2,848.9          |   | $                | 37.2   |                          | $      | 13.8 |   | $ | 34.6 |   |
|                                   |   |                           |         |                                      |        |                  |   |                  |        |                          |        |  |   |  |  |   |

 

| **Other Commercial Commitments** |   | **Total****Amounts****Committed** |   | **Less than****1 Year** |   | **1-3****Years** |   | **4-5****Years** |   | **Over****5 Years** |   |
|----------------------------------|--------|-----------------------------------|--------|-------------------------|--------|------------------|--------|------------------|--------|---------------------|--------|
|                                  |   |                                   |        |                    |        |                  |   |                  |        |                |        |  |   |  |  |   |
|                             |   | **(dollars in millions)**         |   |
| Guarantees                       |   | $                                 | — |                    | $      | —           |   | $                | — |                | $      | — |   | $ | — |   |
| Lines of Credit                  |   |                              | — |                    |   | —           |   |             | — |                |   | — |   |   | — |   |
| Standby Letters of Credit        |   |                              | — |                    |   | —           |   |             | — |                |   | — |   |   | — |   |
| Standby Repurchase Obligations   |   |                              | — |                    |   | —           |   |             | — |                |   | — |   |   | — |   |
| Other Commercial Commitments     |   |                              | 24.8   |                    |   | 3.3              |   |             | 16.5   |                |   | 5.0 |   |   | — |   |
|                             |   |                                   |        |                    |        |                  |   |                  |        |                |        |  |   |  |  |   |
| Total Commercial Commitments     |   | $                                 | 24.8   |                    | $      | 3.3              |   | $                | 16.5   |                | $      | 45.0 |   | $ | — |   |
|                             |   |                                   |        |                    |        |                  |   |                  |        |                |        |  |   |  |  |   |

|   |                                 |
|--------|--------------------------------------|
|   | **Recent Accounting Pronouncements** |

In May 2003, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity”. SFAS No. 150 establishes standards for classifying and measuring as liabilities certain financial instruments that embody obligations of the issuer and have characteristics of both liabilities and equity. SFAS No. 150 represents a significant change in practice in the accounting for a number of financial instruments, including mandatorily redeemable equity instruments. The Company has evaluated its 10% mandatorily redeemable preferred stock and determined that it meets the definition of a liability as set forth in SFAS No. 150 because it is mandatorily redeemable on a fixed date. Accordingly, as of July 1, 2003, the Company will record the mandatorily redeemable preferred stock as debt, and accrete as interest expense the difference between such amount and the amount that will be payable on the redemption date, January 10, 2023.

In April 2003, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.” SFAS No. 149 amends and clarifies financial accounting and reporting for derivative instruments, including certain derivative instruments embedded in other contracts and for hedging activities under SFAS No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This statement is effective for contracts entered into or modified after June 30, 2003. The adoption of this statement is not expected to have a significant effect on the results of operations, financial condition or cash flows of the Company.

In January 2003, the FASB issued FASB Interpretation No. 46, “Consolidation of Variable Interest Entities” (“FIN 46”), which requires variable interest entities to be consolidated by the primary beneficiary of the entity if certain criteria are met. FIN 46 is effective immediately for all new variable

 

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interest entities created or acquired after January 31, 2003. For variable interest entities created or acquired prior to February 1, 2003, the provisions of FIN 46 will become effective for the Company during the third quarter of 2003. The Company is presently evaluating whether it will be required to consolidate from July 1, 2003 any of its unconsolidated affiliates presently accounted for using the equity method as a result of the effectiveness of FIN 46.

In November 2002, the Emerging Issues Task Force reached a consensus on EITF No. 00-21, “Revenue Arrangements with Multiple Deliverables” (“EITF 00-21”). EITF 00-21 provides guidance on how to account for arrangements that involve the delivery or performance of multiple products, services and/or rights to use assets. The provisions of EITF 00-21 will apply to revenue arrangements entered into in fiscal periods beginning after June 15, 2003. The adoption of EITF 00-21 is not expected to have a significant effect on the results of operations, financial condition or cash flows of the Company.

In July, 2002, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (“SFAS”) No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.” SFAS No. 146 replaces Emerging Issues Task Force Issue No. 94-3 “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).” SFAS No. 146 requires that a liability for costs associated with an exit or disposal activity is recognized when the liability is incurred. Under Issue No. 94-3, a liability for an exit cost as defined is recognized at the date of a commitment to an exit or disposal plan. SFAS No. 146 is effective for exit or disposal activities that are initiated after December 31, 2002. The adoption of this standard is not expected to have a significant effect on our results of operations, financial condition or cash flows.

In June 2001, the FASB issued SFAS No. 143, “Accounting for Asset Retirement Obligations,” effective for us on January 1, 2003. This Statement addresses financial accounting and reporting for obligations associated with the retirement of tangible fixed assets and the associated asset retirement costs. We are in the process of evaluating the financial statement impact of the adoption of SFAS No. 143.

 

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|        |                                                            |
|-------------|-----------------------------------------------------------------|
| **Item 3.** | **Quantitative and Qualitative Disclosures About Market Risk.** |

|   |            |
|--------|-----------------|
|   | **Market Risk** |

We are exposed to various market risks, including changes in foreign currency exchange rates and interest rates. Market risk is the potential loss arising from adverse changes in market rates and prices, such as foreign currency exchange and interest rates. We do not enter into derivative financial instruments for trading or speculative purposes. In the past, Old NTL entered into derivative financial instruments to hedge interest rates related to certain of its floating interest rate debt. The counterparties were major financial institutions.

|   | **Interest Rates** |
|--------|--------------------|

The fair market value of long-term fixed interest rate debt and the amount of future interest payments on floating interest rate debt are subject to interest rate risk. Generally, the fair market value of fixed interest rate debt will increase as interest rates fall and decrease as interest rates rise.

At June 30, 2003, Cablecom had zero cost collars, with a notional amount of CHF 1,200.0 million, to hedge exposure to the floating interest rate indebtedness incurred under the Cablecom term loan facility and revolving loan facility.

The following table provides information about our floating interest rate debt and derivative financial instruments that are sensitive to changes in interest rates as of June 30, 2003, and as adjusted to give effect to our emergence from Chapter 11 reorganization.

|                                                               |   | **Six Months****Ending****12/31/03** |        | **Year Ending****12/31/04** |   | **Year Ending****12/31/05** |   | **Year Ending****12/31/06** |   |
|--------------------------------------------------------------------|--------|--------------------------------------|-------------|-----------------------------|--------|-----------------------------|--------|-----------------------------|--------|
|                                                               |   |                                      |             |                        |        |                             |   |                             |        |   |  |  |   |
| **Long-term Debt Including Current Portion**                       |   |                                 |        |                        |   |                        |   |                        |   |   |   |   |   |
| CHF                                                                |   |                                 |        |                        |   |                        |   |                        |   |   |   |   |   |
| Variable Rate                                                      |   |                                 | CHF3,755.0  |                        |   |                        |   |                        |   |   |   |   |   |
|                                                                    |   |                                 | Swiss LIBOR |                        |   |                        |   |                        |   |   |   |   |   |
| Average Interest Rate                                              |   |                                 | Plus 2.5%   |                        |   |                        |   |                        |   |   |   |   |   |
| Average Forward Exchange Rate                                      |   |                                 | .6227       |                        |   |                        |   |                        |   |   |   |   |   |
|                                                               |   |                                 |        |                        |   |                        |   |                        |   |   |   |   |   |
| **Interest Rate Derivative Instruments Related to Long-Term Debt** |   |                                 |        |                        |   |                        |   |                        |   |   |   |   |   |
| Interest Rate Swaps                                                |   |                                 |        |                        |   |                        |   |                        |   |   |   |   |   |
| Notional CHF Amount                                                |   |                                 | CHF1,200.0  |                        |   | CHF1,200.0                  |   |                        | — |   |   | — |   |
| Average Floor Strike Rate                                          |   |                                 | 3.27        | %                           |   | 3.27                        | %      |                        |   |   |   |   |   |
| Average Cap Strike Rate                                            |   |                                 | 5.15        | %                           |   | 5.15                        | %      |                        |   |   |   |   |   |

|                                                               |   |                        |   |           |   |      |   |                      |       |
|--------------------------------------------------------------------|--------|-----------------------------|--------|----------------|--------|-----------|--------|---------------------------|------------|
|                                                               |   | **Year Ending****12/31/07** |   | **Thereafter** |   | **Total** |   | **Fair Value****6/30/03** |       |
|                                                               |   |                             |        |           |        |           |   |                           |            |   |  |  |   |
| **Long-term Debt Including Current Portion**                       |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| CHF                                                                |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| Variable Rate                                                      |   |                        |   |           |   |      |   |                      | CHF3,755.0 |   |   | CHF3,755.0 |   |
| Average Interest Rate                                              |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| Average Forward Exchange Rate                                      |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
|                                                               |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| **Interest Rate Derivative Instruments Related to Long-Term Debt** |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| Interest Rate Swaps                                                |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| Notional CHF Amount                                                |   |                        | — |           |   | —    |   |                      | CHF1,200.0 |   |   | CHF (41.6) |   |
| Average Floor Strike Rate                                          |   |                        |   |           |   |      |   |                      |       |   |   |   |   |
| Average Cap Strike Rate                                            |   |                        |   |           |   |      |   |                      |       |   |   |   |   |

 

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| **Item 4.** | **Controls and Procedures.** |
|-------------|------------------------------|

|   |                                             |
|--------|--------------------------------------------------|
| a)     | Evaluation of Disclosure Controls and Procedures |

Based on their evaluation of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and include controls and procedures designed to ensure that information required to be disclosed by us in such reports is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

| b) | Changes in Internal Controls |
|----|------------------------------|

There were no changes that occurred during the fiscal quarter covered by this Quarterly Report on Form 10-Q that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

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|   | **Risk Factors** |
|--------|------------------|

You should strongly consider these risk factors in evaluating an investment in us, our common stock and our Preferred Stock. An investment in our securities involves an extremely high degree of risk.

| **Risk Factors relating to our Company and our Securities** |
|-------------------------------------------------------------|

**Our common stock has little if any equity value, which makes an investment in our common stock highly speculative.**

Any investment in our common stock is highly speculative. There has been a significant deterioration in valuations of assets similar to those we own and those of our subsidiaries and affiliated joint ventures own. In addition, our Preferred Stock has significant rights and preferences over our common stock and it is likely that we will never declare and pay dividends on our common stock. As a result, there may be little if any remaining equity value attributable to our common stock, which could be worthless.

**We may not pay any future material dividends on our Preferred Stock which could negatively impact the market price of the Preferred Stock.**

On September 12, 2003, we announced a semi-annual dividend of $2.50 per share on our Preferred Stock. We have approximately 6,864,000 shares of Preferred Stock outstanding so the aggregate dividend will be approximately $17,160,000. Since the announcement, the market price of our Preferred Stock has increased substantially. However, there is no requirement under our charter to pay any future dividends on our Preferred Stock and there is no assurance that we will pay any such future dividends. If we do not pay future dividends on our Preferred Stock, then the market price of our Preferred Stock will likely decrease.

**Holders of shares of our common stock and Preferred Stock may have substantial difficulty in selling those shares.**

Our common stock and our Preferred Stock are not quoted on any national market or listed on any national securities exchange. Prices for our common stock and our Preferred Stock are quoted on the Pink Sheets. Securities whose prices are quoted on the Pink Sheets do not enjoy the same liquidity as securities that trade on a national market or securities exchange.

In addition, each of the common stock and the Preferred Stock is a “penny stock” as that term is defined in the Securities Exchange Act of 1934. Brokers effecting transactions in a “penny stock” are subject to additional customer disclosure and record keeping obligations, including disclosure of the risks associated with low price stocks, stock quote information and broker compensation. In addition, brokers effecting transactions in a “penny stock” are also subject to additional sales practice requirements under Rule 15g-9 of the Securities Exchange Act including making inquiries into the suitability of “penny stock” investments for each customer or obtaining a prior written agreement for the specific “penny stock” purchase. Because of these additional obligations, some brokers will not effect transactions in “penny stocks.”

There may also be statutory restrictions on transferability for some holders who received common stock or Preferred Stock under the reorganization plan.

As a result, holders of common stock and Preferred Stock may have substantial difficulty in selling or otherwise disposing of those shares.

 

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**Our Preferred Stock has a significant preference over our common stock which may result in our common stockholders having little value in their investment.**

Our Preferred Stock has significant rights and preferences over our common stock. Our charter which governs the common stock and the Preferred Stock requires us to pay semi-annual dividends to holders of the Preferred Stock on a cumulative basis, and imposes limitations on the payment of dividends on the common stock. Furthermore, on the effective date and pursuant to the reorganization plan, we redeemed $25 million in aggregate liquidation preference of the Preferred Stock. Immediately following such redemption, approximately $343 million of aggregate liquidation preference of Preferred Stock remains outstanding (plus an additional approximate $17.2 million of accrued and unpaid dividends as of June 30, 2003). If we liquidate, holders of Preferred Stock would be entitled to payment of the liquidation preference and accrued and unpaid dividends in full before any distribution could be made to holders of common stock. If we liquidate, the holders of Preferred Stock may not receive the full amount of their liquidation preference and accrued and unpaid dividends, and it is likely that there would be no assets available for distribution to holders of common stock who would receive no recovery. Our Preferred Stock is also entitled to mandatory redemption out of the net proceeds of any asset sale for cash that we or our subsidiaries complete, subject to some limited exceptions set forth in the charter.

**The market price of our common stock has dropped precipitously and may not recover.**

Our common stock reached a high closing sales price of $0.65 on January 14, 2003. As of July 31, 2003, the closing sales price of our common stock was $0.05. Due to a number of factors including that our common stock is a “penny stock,” our common stock trades on the Pink Sheets, most of our holdings may be restructured and the liquidation preference of our Preferred Stock, the value of our common stock may not increase in any significant amount.

**We may not be able and are unlikely, to pay dividends on our common stock.**

Under Delaware law, unless a corporation has available surplus it cannot pay dividends on or redeem its capital stock. We may not have available surplus as determined under Delaware law and may be unable to pay dividends on or redeem any of our capital stock, unless and until such time as we have available surplus. The payment of dividends to holders of common stock will be at the discretion of our board of directors and will depend upon the availability of surplus under Delaware law, and among other things, future earnings, operations, capital requirements, our general financial condition and the general financial condition of our subsidiaries and affiliated joint ventures. It is likely that we will never declare and pay dividends on the common stock.

**Our potential liability for unpaid financing fees could significantly reduce our cash position.**

In connection with the bar date for filing of securities laws claims against the debtors pursuant to an order of the bankruptcy court, proofs of claim were filed against Old NTL, NTL (Delaware), Inc., a wholly-owned subsidiary of Old NTL now known as Parc Holdings, Inc., and NTL Communications Corp., now known as NTL Incorporated, by Morgan Stanley Senior Funding Inc. for $11.4 million. These claims were asserted by Morgan Stanley Senior Funding Inc. in respect of alleged unpaid financing fees for commitments of capital made in 1999. While we intend to vigorously defend against these claims, an adverse determination of these claims could reduce our cash for operations or distribution to our stakeholders.

**Forced sales of our assets or restructurings of those assets may subject us to stringent United States securities regulations.**

A sale or restructuring of certain of our assets may subject us to United States regulatory issues under the Investment Company Act of 1940, as amended, associated with holding minority interests in

 

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operating companies (instead of controlling the operations of the minority interests). Since the regulations governing “investment companies” under the Investment Company Act are complex and restrictive, our board of directors and senior management would most likely examine the strategic alternatives available to us, including, among others, seeking a merger with, or an investment in, an operating company and/or a liquidation of our remaining assets.

**Our guaranty obligations could reduce our cash position.**

We have guaranteed the obligations of one of our subsidiaries, the exposure of which is currently in the aggregate amount of up to approximately £4.2 million. In addition, one of our wholly-owned subsidiaries, Parc Holdings, has guaranteed the obligations of certain of its subsidiaries and affiliated joint ventures, the exposure of which is currently in the aggregate amount of up to approximately £10.5 million. These guarantees arise under the performance of certain contracts by certain of our subsidiaries. As long as these subsidiaries continue to perform the services under these contracts, our financial obligations regarding these guarantees would be reduced. However, any call on these guarantees could substantially reduce our cash position and the cash position of our subsidiaries.

**Our interest in content joint ventures is dependent on the services of a third party.**

We continue to own an interest in joint ventures whose continuance is dependent on the provision of content or services to New NTL’s cable business in the United Kingdom or the provision of certain services on specified terms by New NTL and its subsidiaries to such joint ventures. If New NTL breaches its carriage or service agreements with such joint ventures or fails to renew them, we may not be able to retain the indirect interests that Parc Holdings currently has in such joint ventures. Subsidiaries of New NTL are major customers of such joint ventures and termination or non-renewal of the carriage or service agreements may adversely affect the performance of such joint ventures.

**We have potential liabilities with respect to funding obligations of New NTL liabilities.**

In addition to the guaranty obligations of certain of our subsidiaries and affiliated joint ventures, as a result of existing contractual commitments, we guarantee the obligations of certain companies in the New NTL group relating to ordinary course contracts. If New NTL fails to meet its obligations, we and Parc Holdings may be liable to pay sums to cover the liability of those companies in the New NTL group with respect to such contracts and leases.

**Provisions of our corporate governance documents may prevent transactions involving a change of control of us.**

Our charter and bylaws contain provisions which may have the effect, alone or in combination with each other or with the existence of authorized but unissued common stock and preferred stock, of preventing or making more difficult transactions involving a change of control of our company. In addition, our rights agreement may have a significant anti-takeover effect. The rights agreement has the potential to significantly dilute the ownership interests of an acquiror of shares of our common stock, and therefore may have the effect of delaying, deterring, or preventing a change in control of us.

| **Risk Factors Relating to Cablecom** |
|---------------------------------------|

**We are likely to lose most, if not all, of our ownership interest in Cablecom.**

Cablecom is the principal borrower under an amended and restated credit agreement dated as of April 30, 2002 and effective as of May 2, 2002. Under the credit agreement, Cablecom and one of its subsidiaries are indebted in an amount of approximately CHF 3,792 million (which includes recently accrued interest payments). Although the credit facility was originally scheduled to mature on April 30,

 

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2003, upon the request of Cablecom, the maturity date has been extended to October 31, 2003. Cablecom’s lenders have also agreed to a moratorium on the payment of interest and commitment commission accruing between May 30, 2003 and the date on which Cablecom’s credit agreement is restated as part of the financial restructuring (when a portion of the accrued amounts will be added to the principal amount of the facility). If Cablecom is subject to an insolvency proceeding before its credit agreement is restated, Cablecom’s lenders have agreed to waive such interest and commitment commission. In addition, Cablecom may currently be in default under the credit agreement. Accordingly, the lenders could seek to accelerate the maturity of the credit facility at any time.

Cablecom does not have the resources to repay the bank debt when it comes due, whether on the maturity date or upon the acceleration thereof. Further, as security for its guaranty of Cablecom’s obligations under the credit agreement, the direct parent entity of Cablecom, has pledged to the lenders all of the shares of Cablecom. Accordingly, upon the maturity of the credit facility, whether upon acceleration or otherwise, the lenders could seek to exercise their rights under the pledge. In such an event, although we would not be liable for any of Cablecom’s obligations, we would be deprived of all of our ownership interest in Cablecom.

In addition, Cablecom and certain of its subsidiaries are “overindebted” under Swiss law. If Cablecom is unsuccessful in consummating a transaction with its lenders to resolve that “overindebtedness” issue in the near future (and, in any event, no later than the maturity date of the credit agreement), the board of directors of Cablecom may be required to file for insolvency proceedings under Swiss law. Further, on April 9, 2003, in accordance with Swiss law, the board of directors of Cablecom received a letter from its auditors, Ernst & Young AG, notifying the board of Cablecom that Cablecom and some of its subsidiaries are “overindebted” and, if there is no consensual settlement on the overall financial restructuring of Cablecom, an extension of the maturity date or other steps taken to cure the “overindebtedness,” the board would be required to notify the Swiss courts and “deposit the balance sheets” for Cablecom and its subsidiaries immediately, thereby commencing insolvency proceedings. If Cablecom files for insolvency proceedings, it is unlikely that we will retain any interest in Cablecom.

In order to seek to address the foregoing issues, Cablecom is currently in active negotiations with its lenders regarding an overall financial restructuring of Cablecom and, on June 19, 2003, Cablecom’s board of directors had been advised that 100% of its lenders and other holders of economic interests in Cablecom’s bank debt have agreed upon the principal terms and parameters for the restructuring of that debt.

|   |   | The principal terms for the financial restructuring    are:                                                                        |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                               |
|   | • | The outstanding principal amount of the debt would be reduced from approximately CHF 3.8 billion to approximately CHF 1.7 billion. |

|   |   |                                                                                                                                                    |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | The facility would be split into two tranches, one with a final maturity date of December 31, 2009 and one with a final maturity date of June 30, 2010. |

|   |   |                                                                                                                                                                                             |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | Cablecom’s lenders would acquire control of substantially all of Cablecom’s share capital, with our remaining interest being acquired by certain members of the new shareholder group. |

|   |   |                                                                                                                                                        |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   | • | At the time of the consummation of the restructuring, the additional equity capital would be raised through a rights offering to the new shareholder group. |

The proposed restructuring is subject to various closing conditions, including the negotiation, completion and execution of definitive documentation. As part of such proposed restructuring, we are seeking to sell or retain a small minority interest in Cablecom in consideration for our cooperation in permitting Cablecom to reach a consensual restructuring plan with its lenders. There is, however, no assurance that such proposed restructuring will be completed. Further, whether or not the proposed restructuring is completed, in light of, among other things, the lenders’ ability to exercise their rights

 

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under the pledge, as well as the possibility of insolvency proceedings, we expect to be deprived of our controlling interest in Cablecom in the near future. After such occurrence, the results of Cablecom will not be reported as part of our consolidated results of operations.

**We anticipate that, commencing in the near future, Cablecom’s results will no longer be reported as part of our consolidated results of operations and, therefore, the financial statements contained in this Form 10-Q are not indicative of our future results of operations or financial condition.**

Cablecom and its lenders have been in discussions regarding a complete financial restructuring of Cablecom which will, among other things, reduce the amount of bank debt outstanding, extend the maturity date thereof and resolve Cablecom’s Swiss overindebtedness issue. Whether such negotiations are successful or not, we expect to be deprived of all of our ownership interest in Cablecom. Therefore, we anticipate that, in the near future, the results of Cablecom will no longer be reported as part of our consolidated results of operations. Accordingly, the historical financial statements contained in this Form 10-Q which include Cablecom’s business and results of operations are not particularly reflective of our current and anticipated future business and should not be relied upon as indicative of our future performance.

**Even if we retain a small minority interest in Cablecom, such interest may have little value.**

Even if we retain a small minority interest in Cablecom, the value of this small minority ownership interest will primarily depend on the amount for which Cablecom is eventually sold. As a result, it is unclear at this point whether this small minority ownership interest will have any significant value to us.

**One or more of our officers may face liability as a result of Cablecom’s “overindebtedness” which may reduce our cash available for distribution to our stockholders.**

A number of our officers are also members of the board of directors of Cablecom. Under Swiss law, a company’s board is required to file for insolvency proceedings or a debt moratorium if the company is “overindebted.” If a company’s board fails to timely file an “overindebted” company for insolvency proceedings or a debt moratorium, then, under Swiss law, the directors of that company may face certain liabilities. If any of our officers are the subject of any causes of action resulting from an untimely filing of Cablecom for insolvency proceedings or a debt moratorium, then we may be obligated to fund any expenses or losses incurred by these officers to the extent our insurance would not cover them. Any amount paid by us to these officers could reduce the cash available for distribution to our stockholders.

**Risk Factors Relating to Our Investment in Premium TV**

**If one or more of Premium TV’s contracts is terminated, then Premium TV’s burden of its costs would increase and Premium TV’s ability to continue operations could be impaired.**

Premium TV has a number of interrelated management agreements and joint venture agreements. Premium TV has been notified by one of its joint venture partners that it wishes to terminate a contract. Premium TV has taken action to defend its rights under this contract. It strongly believes that it has fulfilled its material obligations under the agreement and that there is no basis on which it might lawfully be terminated. However, if the contract were terminated, it could have a material adverse effect on Premium TV’s business.

 

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|   |   |                                                                                           |
|--------|--------|------------------------------------------------------------------------------------------------|
|   |   | **Premium TV’s major revenue sources depend on the penetration of broadband technology.** |

Premium TV’s main assets are the internet rights it has with over 75 UK football clubs to make available to users certain data and video content of these football clubs through premium subscriptions. As a result, these premium subscriptions are some of Premium TV’s main revenue sources. Because this content is downloaded fastest and best viewed over the internet via broadband technology, Premium TV’s ability to achieve its targeted revenue will depend on the rate of penetration of broadband technology in the United Kingdom.

**The lack of solvency of UK professional football clubs may have a negative effect on Premium TV’s business.**

A number of the football clubs with    which Premium TV has entered into internet/media rights joint ventures and    other arrangements  are currently experiencing financial difficulties. As a result of these financial  difficulties, the football clubs could seek, among other things, to make organizational  changes, including staff reductions or other changes, to reduce marketing or  other support of Premium TV initiatives, to reduce capital expenditures, to  renegotiate contractual terms or to cease operations entirely. Any of these  developments may have a material adverse effect on Premium TV’s business.

| **Risk Factors Relating to NTL Asia** |
|---------------------------------------|

**If the demand for NTL Asia’s operations does not increase, NTL Asia may not be able to continue its operations.**

The market for broadcast services in Asia has been slow to evolve and, as a result, demand for NTL Asia’s services has been lower than expected. If this demand does not increase, then NTL Asia’s revenue without additional financing may not be sufficient to cover its expenses. In order to improve the cost base and performance of the business it has been necessary to reduce the costs of the operation. The success of the business may be affected by its reduced capacity and the loss of some of the staff.

| **Forward Looking Statements** |
|--------------------------------|

**Actual results may turn out to be materially different from any forward-looking statements included or incorporated by reference in this annual report on Form 10-Q.**

Certain statements    contained in this Form 10-Q may constitute “forward-looking statements.” When used in this Form 10-Q, the words, “believe,” “anticipate,” “should,” “intend,” “plan,” “will,” “may,” “could,” “expects,” “estimates,” “projects,” “positioned,” “strategy,” and    similar expressions identify such forward-looking statements. Such forward-looking    statements involve known and unknown risks, uncertainties and other factors    that may cause the actual results, performance or achievements of our company    and our subsidiaries and affiliated joint ventures, or industry results, to be materially different from those contemplated    or projected, forecasted, estimated or budgeted, whether expressed or implied,  by such forward-looking statements.

Such factors include, among others, those set forth in this section under the caption “Risk Factors” as well as: our ability and the ability of our subsidiaries and affiliated joint ventures to continue as going concerns; the ability to obtain trade credit and shipments and terms with vendors and service providers for current orders; our ability to maintain contracts that are critical to their respective operations; potential adverse developments with respect our liquidity, operations or results of operations; the ability to fund and execute our business plans; the ability to attract, retain and compensate our key executives and associates; our ability to attract and retain customers; general economic and business conditions; technological developments; our ability to continue to design networks, install facilities, obtain and maintain any required governmental licenses or approvals and finance construction and

 

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development, all in a timely manner at reasonable costs and on satisfactory terms and conditions; assumptions about customer acceptance, churn rates, overall market penetration and competition from providers of alternative services; the impact of restructuring and integration actions; the impact of new business opportunities requiring significant up-front investment; and interest rate and currency exchange rate fluctuations. We assume no obligation to update the forward-looking statements contained or incorporated by reference herein to reflect actual results, changes in assumptions or changes in factors affecting such statements.

 

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|         |                  |
|--------------|-----------------------|
| **PART II:** | **OTHER INFORMATION** |

|        |                   |
|-------------|------------------------|
| **Item 1.** | **Legal Proceedings.** |

The Owl Creek litigation (see Note 16 to our financial statement) has been subsequently voluntarily dismissed without prejudice to recommencement in state court where related litigation against other parties is pending.

| **Item 2.** | **Changes in Securities and Use of Proceeds.** |
|-------------|------------------------------------------------|

None.

| **Item 3.** | **Defaults Upon Senior Securities.** |
|-------------|--------------------------------------|

See “Risk Factors Related to Cablecom” and Note 16 to our financial statements.

| **Item 4.** | **Submission of Matters to a Vote of Security Holders.** |
|-------------|----------------------------------------------------------|

No matters were submitted to a vote of our security holders through the solicitation of proxies or otherwise during the second quarter ended June 30, 2003.

| **Item 5.** | **Other Information.** |
|-------------|------------------------|

On September 11, 2003, our board of directors approved a semi-annual dividend of $2.50 per share on our Preferred Stock. We have approximately 6,864,000 shares of Preferred Stock outstanding so the aggregate dividend will be approximately $17,160,000. The record date for the dividend on the Preferred Stock will be September 30, 2003 and the payment date will be October 15, 2003. However, there is no requirement under our charter to pay any future dividends on our Preferred Stock and there is no assurance that we will pay any such future dividends.

| **Item 6.** | **Exhibits and Reports on Form 8-K.** |
|-------------|---------------------------------------|

|   |   |      |
|--------|--------|-----------|
| (a)    |   | Exhibits. |

|   |   |   |                                                                                                                                                                    |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | 4.6    | Amendment No. 2 to Registration Rights Agreement, dated as of June 15, 2003, by and among NTL Europe, Inc., Appaloosa Management L.P. and Angelo Gordon & Co., L.P. |

|   |   |   |                                                                                                  |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------|
|   |   | 31.1   | Certification of Chief Executive Officer pursuant to Securities Exchange Act Rules 13-a14 and 15d-14. |

|   |   |   |                                                                                                  |
|--------|--------|--------|-------------------------------------------------------------------------------------------------------|
|   |   | 31.2   | Certification of Chief Financial Officer pursuant to Securities Exchange Act Rules 13a-14 and 15d-14. |

|   |   |       |                                                                                                                                                          |   |
|--------|--------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|
|   |   |  32.1 | Certification of Chief Executive        Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section    906 of the Sarbanes-Oxley Act of 2002.* |

|   |   |   |                                                                                                                                                |
|--------|--------|--------|-----------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   | 32.2   | Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.* |

|   |   |   |                                                                                              |
|--------|--------|--------|---------------------------------------------------------------------------------------------------|
|   |   | *      | In accordance with SEC Release 33-8238, Exhibits 32.1 and 32.2 are being furnished and not filed. |

 

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|   |                 |
|--------|----------------------|
| (b)    | Reports on Form 8-K. |

|   |   |                                                                                      |
|--------|--------|-------------------------------------------------------------------------------------------|
|   | (1)    | Current Report on Form 8-K, filed April 30, 2003, announcing the status of Cablecom GmbH. |

|   |   |                                                                                                     |
|--------|--------|----------------------------------------------------------------------------------------------------------|
|   | (2)    | Current Report on Form 8-K, filed May 14, 2003, announcing the execution of the B2 settlement agreement. |

|   |   |                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------|
|   | (3)    | Current Report on Form 8-K, filed June 19, 2003, announcing the issuance of a press release by Cablecom GmbH. |

 

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|  **NTL EUROPE, INC.**   Date: September 17, 2003By:/s/ JEFFREY A. BRODSKY  Jeffrey A. Brodsky,    President and Chief Executive Officer   Date: September 17, 2003By:/s/ RICHARD A. SPOHN  Richard A. Spohn,    Vice President, Chief Financial Officer    and Chief Accounting Officer 55 |
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|